Beyond the typical hotspots, are there any specific smaller towns or coastal areas in the UK projected to see a significant uplift in demand for short-term lets or serviced accommodation in 2025, driven by changing tourism trends?
Quick Answer
Look for smaller towns or coastal areas with strong 'staycation' appeal, growing outdoor tourism, and good local infrastructure to identify potential short-term let hotspots beyond traditional destinations in 2025.
## Areas Poised for Growth in UK Short-Term Lets
Several smaller towns and coastal regions across the UK are projected to experience significant growth in demand for short-term lets and serviced accommodation from 2025 onwards. This is largely driven by evolving tourism trends favouring experiential travel, local immersion, and sustainable choices, moving beyond traditional city breaks or established seaside resorts.
* **Scottish Highlands (Specific Pockets)**: Beyond the main NC500 route, areas like **Wester Ross** or parts of **Caithness** offer rugged landscapes, wildlife, and dark skies. These appeal to eco-tourists and adventure seekers. A property acquired for £200,000 could generate gross rental income of £30,000 per annum with high occupancy, potentially increasing by 15-20% as infrastructure and awareness grow.
* **Northumberland Coast (Less-Known Villages)**: While areas like Bamburgh are established, villages such as **Craster** or **Alnmouth** offer picturesque settings, historic castles, and access to the Northumberland National Park. The focus here is on quiet escapes and heritage tourism. A 3-bedroom cottage in Alnmouth purchased for £350,000 might achieve £35,000-£40,000 gross annual income, with an anticipated uplift as domestic tourism diversifies.
* **South Wales Valleys (Gateway Towns)**: With increased investment in outdoor activity tourism and cultural projects, towns like **Merthyr Tydfil** or **Aberdare**, close to Brecon Beacons National Park and adventure sports centres, are gaining traction. They offer affordability combined with access to nature. A terraced property bought for £150,000 could yield £20,000-£25,000 annually as a short-term let, with growth linked to regional regeneration and event hosting.
* **East Devon Coast (Specific Villages)**: Moving past Torquay or Lyme Regis, villages like **Beer** or **Branscombe** provide charming, unspoiled coastal experiences within an Area of Outstanding Natural Beauty. These locations attract families and walkers seeking a quieter pace. A holiday cottage in Beer valued at £400,000 could achieve £45,000-£50,000 gross rental income, seeing increased bookings as tourists seek authentic village life.
## Potential Challenges and Considerations for Short-Term Let Investment
While growth opportunities exist, investors must be aware of specific challenges that accompany these emerging markets. These often include regulatory changes, local sentiment, and infrastructure limitations.
* **Local Authority Regulations and Sentiment**: Many councils, particularly in popular tourist areas, are introducing or considering increased council tax premiums on second homes, such as the ability for councils to charge up to 100% additional Council Tax on furnished second homes from April 2025. They may also implement stricter planning permission requirements or licensing for short-term lets, impacting viability and compliance costs. A property currently paying £2,000 in Council Tax could see this rise to £4,000 annually if classified as a second home and subjected to the maximum premium.
* **Infrastructure Limitations**: Smaller towns and villages might lack the robust infrastructure of larger centres, including limited public transport, slower internet speeds, or fewer dining and retail options, which can affect guest experience and booking appeal. This also impacts the ability to attract and retain reliable cleaning and maintenance services.
* **Seasonality and Marketing Costs**: Demand in non-traditional areas can be highly seasonal, leading to extended periods of lower occupancy during off-peak months. Effective marketing to attract year-round bookings can be more challenging and expensive than in established hotspots.
* **Competition and Saturation**: As an area gains popularity, it can quickly become saturated with new short-term let properties, driving down occupancy rates and average daily rates if the market grows too quickly without corresponding demand. This requires careful monitoring of local market dynamics.
## Investor Rule of Thumb
When considering emerging short-term let locations, always conduct thorough local market research into council policies, tourism trends, and infrastructure development to ensure long-term viability and avoid unexpected costs.
## What This Means For You
Exploring these non-traditional locations for short-term lets offers an opportunity to achieve higher yields and capital growth as these areas develop. However, this strategy demands deeper due diligence than investing in established markets, particularly regarding local council regulations and tourism infrastructure. Most landlords don't lose money because they pick the wrong area, they lose money because they don't research thoroughly enough and fall foul of unforeseen local challenges. If you want to know how to identify these next growth areas and properly assess their long-term potential, this is exactly what we analyse inside Property Legacy Education.
Steven's Take
The shift in tourism trends towards more authentic, regional experiences is creating opportunities beyond the typical investor focus. I've always advocated for looking where others aren't, and these smaller towns and coastal areas represent that frontier. However, the caveat is critical: local government regulations are tightening. You need to understand the specifics for each council area, not just general trends. The potential for a 100% Council Tax premium on second homes from April 2025 is a significant cost increase that must be factored into your financial modelling. My advice is to engage with local planning departments and community groups early in your research.
What You Can Do Next
1. Research local council websites: Specifically look for their Council Tax policies on second homes and any proposed or enacted short-term let licensing schemes or planning restrictions. Check gov.uk for links to specific local authorities.
2. Consult local tourism boards: Obtain data on visitor numbers, seasonal trends, and planned infrastructure projects for your target areas. Use VisitEngland or VisitScotland websites.
3. Engage with local property professionals: Speak to estate agents, letting agents, and property managers who operate in these smaller towns and villages to understand real-time market dynamics and rental demand.
4. Analyse booking platform data: Utilise tools like AirDNA or similar services to assess existing short-term let performance, average daily rates, and occupancy levels in specific postcodes within these emerging areas.
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