14th June 2025

How to calculate holiday let yields in the UK

If you’re considering investing in a short-term rental property, understanding how to calculate your potential return is the first thing you’ll need to know. Unlike long-term buy-to-let investments, holiday lets generate income that fluctuates throughout the year. That’s why using a holiday let profit calculator can help you make an informed decision before committing. This article will show you how to work out your potential return, but for further information detailing the ins and outs of holiday rentals we’d recommend reading our ‘Are holiday lets still a good investment?’ blog. If you’re already set on the answer to this question and want to calculate potential yield, keep reading. 

What is a holiday let yield?

Yield tells you how much profit your property is likely to make, expressed as a percentage of the money you put in. For holiday lets, this is slightly more complex than traditional long-term rentals, as income depends heavily on occupancy rates and seasonal pricing. 

Yield is found using simple calculation. All you need to do is gather all of your outgoing costs, alongside average estimates for the area you’re considering, and input them into the following equation:

Step 4 – Work out your annual gain on investment (part 2)

Now that you’re familiar with what occupancy rate and seasonal pricing is for holiday lets, and know how to calculate them based on your own estimates or actual income figures, the next step in working out your annual gain on investment is to put them together. The formula for this is as follows:

In the example above, we’ve made the assumption that the off-peak season is 38 weeks long, has an average cost per week of £600, and has an occupancy rate of 70%. This means that the on-peak season lasts 14 weeks, and in this instance the average cost per week is higher at £750, and the occupancy rate has also increased to 80%. With seasonality and occupancy considered, this brings the estimated annual gain on investment to £24,360.

Step 3a: Estimate your annual income

Unlike traditional rentals, income from a holiday let isn’t fixed. To estimate it, you’ll need to determine your expected occupancy rates for both peak and off-peak seasons. Most investors calculate this by dividing the number of booked nights by the number of available nights in a year.

Next, multiply your average weekly rate by your estimated occupancy for both peak and off-peak periods. This will give you a more accurate annual income figure. Some landlords use a holiday let income calculator to simplify this process, combining seasonal rates, average occupancy, and commission fees in one place.

How do you calculate occupancy rate?

Occupancy rate for a vacant property is calculated by taking the number of rooms occupied over any given time period, and dividing it by the total number of rooms available in the property (both occupied and unoccupied). This will give you a decimal figure which, when multiplied by 100, will give you the occupancy rate in percentage form.

Occupancy Rate = 100 x Number of occupied rooms ÷ total number of rooms

To provide an example, if your property has four rooms, and you have an average of three rooms occupied over the course of one week, your occupancy rate for that week is 75%, as the completed formula below shows:

75% = 100 x 3 ÷ 4

You can apply this formula to any length of time.

How do you calculate occupancy rate for a single property?

If you’re renting out your whole property, rather than dividing the number of rented rooms by the total number of rooms available, you simply need to use the following formula:

Occupancy Rate = 100 x Number of nights the property is booked for ÷ Total number of nights

For example, if you have a cottage available as a single holiday let and want to calculate its occupancy rate over a two-week period, divide the number of nights it was booked by the total number of nights in that period. In this case, there are 14 nights in two weeks. If the property was booked for 9 of those nights, the calculation would look like this:

Occupancy Rate = (9 ÷ 14) × 100 = 64.3%

This means the property was occupied 64.3% of the time during that two-week window.

What about seasonal pricing?

Unlike traditional rentals that charge a fixed monthly rate, holiday lets adjust their pricing throughout the year based on demand. Rates typically increase during peak seasons and drop in quieter months to stay competitive and maximise bookings. This pricing flexibility makes it difficult to predict annual income, but without an estimate, you can’t calculate your ROI.

You should calculate your average weekly rates for both peak and off-peak seasons, then use these to estimate total yearly income. For example, to work out the average weekly rate for a 6-week peak season:

Average Weekly Rate = Total of Weekly Prices ÷ Number of Weeks

Using this formula:

£745 = [(3 × £700) + (2 × £820) + (1 × £730)] ÷ 6

In this case, the property was priced at £700 for three weeks, £820 for two weeks, and £730 for one week. The total of these prices divided by six weeks gives an average rate of £745 per week for that season. This average can then be used, along with occupancy rates, to estimate seasonal and annual income.

Step 3b: Calculating your annual gain on investment

Once you’ve estimated your occupancy rates and average seasonal pricing, the next step is to combine them to calculate your projected annual income. This gives you your annual gain on investment before expenses.

Annual Gain = (Off-peak weeks × Off-peak weekly rate × Off-peak occupancy) + (Peak weeks × Peak weekly rate × Peak occupancy)

The following is a working example to help illustrate the calculation.

Annual gain on investment = 38 (£600 x 70%) + 14 (£750 x 80%) 

£24,360 = £15,960 + £8,400

This example assumes a 38-week off-peak season (average £600/week, 70% occupancy) and a 14-week on-peak season (average £750/week, 80% occupancy).

Step 4: Calculate your ROI using the formula

After working out your initial investment, annual running costs, and projected annual income, you’re ready to calculate your return on investment (ROI) using the formula at the beginning of the article. 

ROI = (Annual Income – Annual Costs) ÷ Initial Investment

This will give you the estimated yield for your holiday let. If you complete the same calculations for all of the properties you’re considering investing in, you can decide which property is likely to provide the highest return.

Holiday let income calculation – full example

To help you follow the calculations discussed in this blog, here’s a simple example using fictional figures for illustration purposes only.

Initial Investment:

• Property purchase: £100,000
• Legal fees: £2,000
• Renovation and furnishings: £3,000

Total initial cost: £105,000

Annual Running Costs:

• Monthly bills (insurance, taxes, utilities): £200
• Monthly maintenance (cleaning, supplies): £200
• Monthly management and advertising: £100
• Annual platform commission: £893.55

Total annual costs: £6,893.55

(£500/month × 12 = £6,000 + £893.55)

Estimated Annual Income:

• Off-peak (38 weeks): £745/week at 70% occupancy

= 38 × (£745 × 0.70) = £19,817

• Peak (14 weeks): £890/week at 80% occupancy

= 14 × (£890 × 0.80) = £9,968

Total annual income: £29,785

(£19,817 + £9,968)

Return on Investment (ROI):

• ROI = (Annual Income – Annual Costs) ÷ Initial Investment

= (£29,785 – £6,893.55) ÷ £105,000

= £22,891.45 ÷ £105,000 ≈ 21.8%

This gives you a projected ROI of approximately 21.8%, based on the assumptions above.

Invest in holiday let property with SDL Property Auctions

Investing in a holiday rental property can feel like a complex challenge, but with the right approach, it has the potential to deliver lucrative returns, and success depends on choosing the right property.

At SDL Property Auctions, we help buyers find suitable properties. Whether you’re looking for a city flat with holiday let potential or a larger property ideal for conversion into a guesthouse or B&B, our listings offer a wide range of opportunities.

You can begin your search using our Property Finder. Filter by location, property type, size, and budget to narrow down your options. If you need guidance or have questions about the auction process, simply contact us as our experienced team is always here to help.