Affluent families investing in holiday cottages

There's definitely growing demand from affluent buyers for holiday cottages that sit somewhere between a lifestyle purchase and an investment. For many, it’s less about chasing pure yield and more about owning a property in a location they genuinely want to spend time in, while generating income when they’re not using it. The strongest demand tends to be in established premium UK leisure markets such as Cornwall, Devon, the Cotswolds and Norfolk. Some buyers purchase outright, but many still use mortgages strategically to preserve liquidity. The key is not to treat it like a standard buy-to-let — holiday lets can work well, but buyers need to be realistic about seasonality, running costs and how the property will actually be used.

People with high amounts of cash, who aren't wanting to invest in the stock market or want to see a physical asset, have always preferred property and so look to provide the family with a holiday home that all can enjoy. A mortgage can be viable if they are young enough, however most want to avoid debt and want to buy with cash, especially if they aren't renting it out. They don't want the pressure of family members paying them to cover the mortgage, but use the discounted rental as a bonus towards the maintenance of the property.

This trend is real. For affluent families, it's rarely a pure investment decision. It's a hybrid purchase: an asset they genuinely want to use, structured to generate income when they're not there. The lifestyle dividend is often just as important as the financial return. Historically, many second homes in places such as Rock or Salcombe sat empty for much of the year, effectively dormant capital. Today's buyers increasingly want those properties to cover some of their own costs while remaining private retreats for family and friends. Many buy outright, although some use specialist borrowing to keep more of their investment portfolio working elsewhere. The numbers need scrutiny. Occupancy is seasonal, running costs are often underestimated and the tax treatment has become less favourable. If the investment case only works on optimistic assumptions, it's probably the wrong purchase. With first-class management, it can be an attractive blend of capital growth, income and lifestyle needs.

Treat the lifestyle as the return, and any income as a bonus. The families who do this well buy a place they would happily use even if it never earned a penny. The ones who get burned bought a spreadsheet. Two cautions our data throws up. First, cost of entry: a second home carries a 5% stamp duty surcharge from day one, which eats years of net yield. Second, the stock. The popular coastal and rural spots are exactly where homes are oldest and least efficient. Our analysis of the energy register found 68.5% of lower-rated homes in Cornwall, and 66.0% in Westmorland and Furness, had still not reached EPC band C a decade later, so tightening rules for lets could mean a big upgrade bill before you can legally rent it out. These are also thin markets to sell in when the cycle turns. So yes, a real lifestyle win, but go in for the memories first and the maths second, with the tax and the EPC priced in.

We just got a mortgage offer for a holiday bolt hole in Kent for a client. It has been their dream for sometime and they considered moving to a bigger main residence or a holiday home and after crunching the numbers, the holiday home came out on top.

We're seeing growing demand among affluent families for premium holiday homes that act as both a lifestyle asset and an investment. Areas such as Cornwall, North Norfolk, the Cotswolds, the Lake District and parts of Devon remain popular due to strong domestic tourism. Many purchases are still made outright, particularly where inheritance, business sale proceeds or bonuses have created available capital, although mortgages can be appropriate where buyers want to preserve liquidity or diversify investments. The key is to view the property primarily as a lifestyle purchase with income potential, rather than a pure investment. Occupancy rates, management costs, maintenance, tax treatment and seasonality can significantly affect returns. A client purchased a coastal property partly for family use and expected rent to cover most costs. After allowing for agency fees, maintenance and periods of low occupancy, returns were lower than anticipated but the family valued the flexibility of usage.

Apart from the frenzy of the Covid years, when investors were snapping up property at pace, our homeowners have always been lifestyle investors first. They buy because they love the location, spend four to six weeks a year enjoying it, and care deeply about the local community. The difference is that financial performance now matters more than ever. Owners no longer want a holiday home that simply covers its costs; they want it to generate a meaningful return while still delivering the lifestyle benefits that attracted them in the first place. For many, achieving 70 booked nights a year has also become increasingly important to avoid double council tax charges.