Cornwall Holiday Lets Yield 6.0%, but Costs Narrow the Gap

Cornwall Holiday Lets Gross 40% More Than Buy-to-Let, Before Costs

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

Holiday lets gross approximately £18,276 per year compared to £12,888 for buy-to-let. That headline gap narrows considerably once you account for higher management costs, furnishing, insurance, and platform fees on the holiday let side.

Holiday let only outperforms buy-to-let if occupancy exceeds roughly 35%. Cornwall's market average sits at 50%, comfortably above that threshold, but individual properties vary enormously depending on location, quality, and seasonal demand. A coastal cottage in St Ives will occupy very differently from an inland property near Bodmin.

What Happens When Occupancy Shifts

Occupancy is the single biggest variable in holiday let returns. Buy-to-let income is essentially fixed once tenanted, but holiday let income swings dramatically:

• At 35% occupancy (a quiet year or new listing): gross revenue drops to around £12,740, barely above buy-to-let gross rent, and almost certainly below it after higher operating costs.
• At 50% occupancy (market average): gross revenue of approximately £18,276 gives holiday let a clear gross advantage.
• At 60% occupancy (well-reviewed property in a prime spot): gross revenue reaches around £21,967, making holiday let the significantly stronger strategy.

The spread between best and worst case is substantial. This is why the suburb-level data in the dashboard matters: it shows actual occupancy patterns for each postcode area, not just the Cornwall-wide average.

Yields Vary by Over a Full Point Across Cornwall's Postcode Areas

Cornwall's 315 postcode areas show wide variation in buy-to-let yields. The cheapest entry points tend to deliver the strongest yields, while higher-priced coastal areas compress returns despite stronger nightly rates.

The top-yielding areas cluster around inland mid-Cornwall, where purchase prices sit well below the county average. Entry prices as low as £219,431 in areas like Cornwall (PL24) deliver yields above 5.5%, while premium coastal postcodes push prices towards £538,716 and compress yields below 4%.

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.

Cornwall's Holiday Let Costs Eat Over a Third of Gross Revenue

The gross revenue gap between holiday let and buy-to-let is misleading without a cost breakdown. Holiday lets carry substantially higher operating expenses that erode the advantage.

Holiday let annual costs (estimated):

• Letting agent fees (22% of gross): approximately £4,021
• Airbnb host fee (15.5% of bookings made through the platform): approximately £2,833
• Insurance: around £1,432
• Maintenance and wear: around £3,676 (higher turnover increases wear)
• Utilities (host-paid): approximately £2,088
• Council tax: typically paid by the tenant (buy-to-let) or covered by Small Business Rate Relief (holiday let)
• Upfront furnishing: around £13,500 (one-off, but needs periodic refresh)

Buy-to-let annual costs (estimated):

• Letting agent fees (11% of rent): approximately £1,432
• Insurance: around £584
• Maintenance: lower than holiday let (tenant bears daily upkeep)
• Utilities: typically tenant-paid
• Council tax: typically paid by the tenant (buy-to-let) or covered by Small Business Rate Relief (holiday let)

After costs, the holiday let advantage narrows significantly. At average occupancy, the net difference between the two strategies is modest. At below-average occupancy, buy-to-let can actually come out ahead on a net basis. This makes execution quality, specifically maintaining high occupancy through strong reviews, professional photography, and competitive pricing, the decisive factor for holiday let investors in Cornwall.

Cornwall Faces No Night Cap, but Planning Rules Still Apply

Cornwall is one of the more permissive holiday let markets in England. There is no night cap (the 90-day rule applies only within Greater London), no permit requirement, and no specific holiday let licensing scheme. This regulatory environment is a significant advantage compared to cities where caps or bans restrict holiday let revenue.

However, converting a residential property to a dedicated holiday let may require planning permission as a change of use (from C3 residential to C3 with holiday let use or sui generis). Cornwall Council has been increasingly attentive to the impact of holiday lets on local housing supply, and investors should check the current planning position with the council before purchasing. Some areas with high concentrations of holiday lets may face stricter scrutiny on change-of-use applications.

There is no additional lodging tax on holiday lets in Cornwall (0.0%), though business rates may apply if the property is available to let for 140 or more nights per year. Properties meeting this threshold are removed from council tax and placed on the business rates register, where small business rate relief may apply, potentially reducing the tax burden to zero.

After Tax, Buy-to-Let Closes the Gap in Cornwall

The Furnished Holiday Lettings (FHL) tax advantage has been removed from April 2025, making the financial comparison between holiday letting and buy-to-let more important than ever. Both strategies are now taxed equivalently, which eliminates what was previously a meaningful benefit for holiday let operators.

Key tax considerations for Cornwall investors:

• Mortgage interest relief: Restricted to a 20% basic rate tax credit for both holiday let and buy-to-let. Higher rate taxpayers (40%) effectively lose half their mortgage interest deduction. On a property priced at £303,831 with a 75% LTV mortgage at 5%, the annual interest would be approximately £12,740. A higher rate taxpayer receives only a £2,274 credit rather than the £4,728 full deduction they would have received under the old rules.
• Stamp duty: A 5% surcharge applies on additional property purchases (from October 2024). On a Cornwall property at the median price, this adds a meaningful upfront cost. Transaction costs are complex and banded; check current rates with your solicitor or conveyancer.
• Capital gains tax: 18% for basic rate taxpayers, 24% for higher rate taxpayers on residential property disposals (from October 2024). Cornwall's potential for capital appreciation over time makes this relevant at exit.
• Allowable expenses: Repairs, insurance, letting agent fees, ground rent, and professional fees remain deductible against rental income for both strategies.

With tax treatment now identical, the decision between holiday let and buy-to-let in Cornwall rests entirely on gross revenue, operating costs, and the investor's willingness to manage a more operationally intensive business. The tax playing field is level. For more detail on how these calculations work, see the data sources page.

Cornwall Yields Lag the South West and UK Averages

Comparison of key investment metrics.

Cornwall's buy-to-let yield of 4.2% sits slightly below the South West average of 4.5% and notably below the UK-wide average of 5.0%. The explanation is straightforward: Cornwall's property prices are elevated relative to achievable rents, driven by lifestyle demand and second-home buyers who push prices beyond what rental income alone would justify.

This makes the holiday let option more important in Cornwall than in higher-yielding markets. In areas where buy-to-let already delivers 6%+ gross, the operational burden of holiday letting may not be worth the incremental revenue. In Cornwall, where buy-to-let yields are compressed, the holiday let premium can be the difference between a viable investment and a marginal one. Devon faces similar dynamics as a neighbouring South West holiday market.

Investors comparing Cornwall to other UK holiday let markets should weigh the permissive regulatory environment against the lower base yields. Our market score methodology accounts for both factors. Explore the full Cornwall data in the dashboard to see how individual postcode areas compare.

Investment Bottom Line for Cornwall

Cornwall offers a clear but conditional advantage for holiday let over buy-to-let. The gross revenue premium is real, the regulatory environment is favourable, and demand for holiday accommodation remains strong in one of England's most popular tourist counties. But the advantage depends on execution: maintaining occupancy above 35%, managing costs tightly, and choosing the right postcode area.

For buy-to-let investors, Cornwall's 4.2% gross yield is below the UK average, making it a better market for those who also expect capital appreciation or who can secure properties in the higher-yielding inland postcode areas where entry prices start from £219,431.

Data reflects market conditions as of March 2026.

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.