Edinburgh Holiday Lets Triple Buy-to-Let Gross Returns

Estimates for a typical 3-bedroom house. Figures are modelled from market data; not guaranteed outcomes.

Holiday let gross revenue is roughly three and a half times higher than buy-to-let annual rent. However, holiday let operating costs (letting agent fees, insurance, cleaning, furnishing, platform fees) are substantially higher, which narrows the net gap considerably.

⚠ Holiday let figures apply only where a valid short-term let licence has been obtained. Edinburgh's short-term let control area means planning permission may also be required for secondary letting (non-primary residence). Check with the City of Edinburgh Council before proceeding.

Holiday Let Only Needs 21% Occupancy to Beat Buy-to-Let in Edinburgh

The break-even occupancy for holiday let versus buy-to-let in Edinburgh is approximately 21%. That is the point at which holiday let gross revenue matches buy-to-let annual rent. At £321 per night across 330 available nights, an occupancy rate of just 21% generates roughly £21,972 in gross revenue, the same as a year of buy-to-let rent.

With Edinburgh's market-wide average occupancy sitting at 73%, the typical holiday let operates well above break-even. But that gross figure is before Airbnb's host fee of 15.5%, letting agent fees of around 22%, cleaning at £65 per turnover, higher insurance (approximately £1,190 versus £485 for buy-to-let), and upfront furnishing costs of around £13,500.

The occupancy sensitivity matters more than most investors expect:

• At 58% occupancy (a quieter year or off-peak location): gross revenue drops to approximately £61,306
• At 73% occupancy (the Edinburgh average): gross revenue sits at around £77,186
• At 83% occupancy (a prime Old Town or Festival-area property): gross revenue reaches roughly £87,772

Even the low scenario produces nearly three times the buy-to-let annual rent, which is why Edinburgh's holiday let market remains so attractive despite the licensing regime. The real question is whether your specific postcode area can sustain strong occupancy year-round, and that is where the suburb-level dashboard data becomes essential.

Edinburgh's Festival City Status Drives Occupancy Above Most UK Markets

Edinburgh is the UK's second most visited city after London, and unlike London, it has no 90-day cap on holiday lets. The Edinburgh Festival Fringe alone draws over 3 million visitors each August, with the International Festival, Hogmanay celebrations, and Six Nations weekends creating demand peaks throughout the year. This multi-season tourism calendar is what sustains the 73% average occupancy across the city.

Seasonality is still a factor. Properties in the Old Town (EH1) and New Town command peak rates during August that can be two to three times the winter rate, while properties further from the centre see less dramatic swings. For an investor, the key consideration is whether you can achieve above-average occupancy in your specific postcode area, or whether you will be competing with thousands of other listings for a smaller share of off-peak demand.

The holiday let market's strength is also its risk: Edinburgh has the highest density of holiday let listings per capita of any Scottish city, and the council's short-term let control area designation reflects growing political pressure to restrict supply. Investors should factor in the possibility of tighter regulation in future years.

Yields Range from 8.8% to 9.6% Across Edinburgh's Postcode Areas

Edinburgh is not one market; it is 116 postcode areas with meaningfully different price points and rental yields. The variation in buy-to-let gross yield alone spans nearly a full percentage point across the top-performing areas.

The outer postcode areas (Newbridge EH28, Kirknewton EH29, South Queensferry EH30) deliver the highest buy-to-let gross yields, at around 9.5% to 9.6%, driven by lower entry prices rather than higher rents. Inner-city areas like Portobello (EH15) and Gilmerton (EH17) offer marginally lower yields but stronger holiday let occupancy due to proximity to tourist attractions and transport links.

These are averages per postcode area. The dashboard breaks it down further, by bedroom count and property type, so you can model your specific property.

Holiday Let Costs Consume Over 40% of Gross Revenue in Edinburgh

The gross revenue gap between holiday let and buy-to-let is dramatic, but the cost gap is equally dramatic. A holiday let in Edinburgh carries several layers of expense that buy-to-let investors avoid.

For a holiday let generating approximately £77,186 in gross revenue, the major annual costs include:

• Airbnb host fee: 15.5% of booking revenue
• Letting agent (full service): around 22% of revenue
• Insurance: approximately £1,190 per year
• Cleaning: £65 per turnover (at 73% occupancy, this adds up quickly)
• Utilities: around £2,088 per year (the host covers these, unlike buy-to-let)
• Maintenance: estimated at £8,000 per year (higher turnover means more wear)
• Furnishing: approximately £13,500 upfront, with periodic replacement
• Council tax: 0.6% of property value, approximately £1,670 per year
• Short-term let licence: application and renewal fees (vary; check with the council)

For buy-to-let, the cost structure is simpler: letting agent fees of around 11%, insurance at approximately £485, maintenance, and council tax. The tenant typically covers utilities. The net margin on buy-to-let is thinner in absolute terms but far more predictable.

After all costs, holiday let still outperforms buy-to-let in Edinburgh for most well-located properties. But the margin is closer to 1.5 to 2 times rather than the 3.5 times suggested by gross revenue alone.

After Tax, Buy-to-Let Closes the Gap Further in Edinburgh

The Furnished Holiday Lettings (FHL) tax regime was abolished from April 2025, removing what was previously a significant tax advantage for holiday let operators. Holiday lets and buy-to-let are now taxed equivalently, making the financial comparison between holiday letting and buy-to-let more important than ever.

Key tax considerations for Edinburgh investors:

• Mortgage interest relief: Restricted to a 20% basic rate tax credit for both holiday let and buy-to-let. Higher-rate taxpayers can no longer deduct mortgage interest in full, which compresses net yields on leveraged purchases.
• Stamp duty surcharge: Scotland's Additional Dwelling Supplement (ADS) of 8% applies to additional residential properties (from December 2024). On a property at £259,860, this adds a material upfront cost. Stamp duty rates and ADS are set by Revenue Scotland and change periodically; check with your solicitor for the current calculation.
• Capital gains tax: Residential property disposals are taxed at 18% (basic rate) or 24% (higher rate) from October 2024. The previous CGT advantages for FHL properties no longer apply.
• Allowable expenses: Repairs, insurance, letting agent fees, and ground rent remain deductible for both strategies.

For a higher-rate taxpayer with a leveraged purchase, the restricted mortgage interest relief hits hard on both strategies. The practical effect is that Edinburgh's buy-to-let yield of 8.5% gross can drop below 5% net after mortgage costs and tax, while holiday let net yields remain higher but are more variable and management-intensive. Consult a tax adviser to model your specific situation.

Edinburgh Yields 8.5% Against the UK Average of 5.6%

Edinburgh's buy-to-let gross yield of 8.5% sits well above the UK national average of 5.6%, making it one of the stronger performing city markets for income-focused investors. Property prices at £259,860 are close to the UK average of £256,225, but rents at £1,831 per month significantly exceed the national average of £1,197.

Comparison of key investment metrics.

Edinburgh commands a significant price premium over the Scottish average (roughly 56% higher), but rents are also well above average (around 52% higher), keeping yields close to the Scottish average despite the price premium. Compared to Glasgow, which offers higher gross yields on cheaper property, Edinburgh provides stronger capital growth prospects and more resilient holiday let demand. The trade-off is a higher barrier to entry.

For investors comparing Scottish cities, the choice often comes down to cash flow versus growth. Edinburgh's combination of solid buy-to-let yields and exceptional holiday let potential makes it unusual among UK cities at this price point. You can explore how our data sources feed into these calculations.

Scotland's Licensing Regime Adds Cost but Not a Night Cap

Since October 2022, all short-term lets in Scotland require a licence. Edinburgh, as the country's busiest holiday let market, has the strictest enforcement. The licensing regime does not impose a night cap (unlike London's 90-day rule), but it introduces several compliance requirements:

• Short-term let licence: mandatory for all holiday let properties. Application fees and processing times vary.
• Planning permission: Edinburgh designated a short-term let control area in 2022. Secondary letting (where the property is not your primary residence) may require planning permission for change of use. This is the most significant barrier for investors.
• Safety compliance: fire, gas, and electrical safety certificates are required, along with insurance and property standards.

The practical effect is that Edinburgh's holiday let market has a higher barrier to entry than most UK cities outside London. Investors who secure both the licence and (where needed) planning permission benefit from reduced competition, which supports occupancy rates and nightly rates. Those who cannot obtain planning permission are limited to buy-to-let.

This regulatory environment is evolving. The Scottish Government has signalled further willingness to give councils tools to manage holiday let supply. Investors should monitor council policy and factor in the risk of tighter controls when modelling long-term returns. Our market score methodology accounts for regulatory risk in the overall score.

Investment Bottom Line for Edinburgh

Edinburgh offers one of the UK's most compelling dual-strategy investment markets. Buy-to-let gross yields of 8.5% exceed the national average by a wide margin, while holiday let gross yields of 29.7% reflect the city's world-class tourism demand. The licensing and planning requirements add friction and cost, but they also limit new supply, which supports returns for compliant operators.

The decision between holiday let and buy-to-let in Edinburgh comes down to three factors: whether you can obtain planning permission (if needed), whether you are willing to manage or pay for the operational complexity of holiday letting, and whether your specific postcode area sustains the occupancy needed to justify the higher costs.

Data reflects market conditions as of March 2026. Edinburgh's 116 postcode areas show meaningful variation in yields, prices, and holiday let potential. The city-wide averages in this article are a starting point; the investment case depends on your specific property and location.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.