Leeds Holiday Lets Yield 9.0%, but Costs Eat Half

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

Holiday letting grosses approximately 55% more than buy-to-let in Leeds. However, holiday let operating costs are significantly higher, which narrows the net income gap considerably.

Holiday Let Only Needs 27% Occupancy to Match Buy-to-Let in Leeds

The break-even occupancy, the point at which holiday let gross revenue equals buy-to-let annual rent, sits at just 27%. With the market average at 41%, most Leeds properties clear this threshold comfortably. That low break-even reflects the relatively modest buy-to-let rents combined with solid nightly rates.

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

• At 26% occupancy (a quiet year): gross revenue drops to around £14,415, still above the buy-to-let annual rent of £14,057, though operating costs would eat most of the surplus.
• At 41% occupancy (market average): gross revenue of approximately £22,576 provides a healthy buffer.
• At 51% occupancy (strong performer): revenue climbs to around £28,016, delivering a much wider margin over buy-to-let.

The takeaway: holiday let outperforms at average or better occupancy, but execution matters. A poorly marketed property in a low-demand postcode could underperform a straightforward buy-to-let. The dashboard lets you model your specific occupancy assumptions.

Leeds Suburbs Range from 10.4% to 7.3% Yield: Location Is Everything

Across 192 postcode areas in Leeds, yields vary enormously. The most affordable inner suburbs deliver double-digit gross yields, while pricier outer areas offer lower yields but potentially stronger capital growth. Choosing the right postcode matters more than choosing between holiday let and buy-to-let.

The pattern is clear: affordable inner-city postcodes like Harehills/Richmond Hill (LS9) and Beeston/Holbeck (LS11) deliver the highest gross yields, driven by low entry prices rather than exceptional rents. These areas offer the best of both worlds for holiday let operators: enough visitor demand from Leeds' growing tourism and events scene, combined with prices low enough to generate strong returns.

More expensive postcodes like Hunslet/Belle Isle (LS10) offer lower yields but attract a different investor profile, one focused on capital appreciation and tenant quality rather than maximising cash flow.

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.

View Leeds in the dashboard → Free preview · every bedroom count and property type

Operating Costs Cut Holiday Let Net Yield to 3.8% in Leeds

The 55% gross revenue advantage for holiday letting shrinks dramatically once costs are factored in. Holiday let annual operating costs run to approximately £12,980, compared to around £7,420 for buy-to-let. That difference is what closes the gap.

Holiday let annual costs (estimated):

• Airbnb host fee: 15.5% of gross revenue (approximately £3,499)
• Letting agent: around 20% of gross revenue (approximately £4,515)
• Insurance: approximately £1,255
• Maintenance (including furnishing replacement): approximately £3,298
• Utilities: approximately £1,980 (the host covers these, unlike buy-to-let)

Buy-to-let annual costs (estimated):

• Letting agent: around 9% of rent
• Insurance: approximately £512
• Maintenance: lower than holiday let due to less turnover

After all costs, holiday let nets approximately £9,596 per year (3.8% net yield), while buy-to-let nets approximately £6,637 (2.7% net yield). The gap narrows from a substantial gross premium to a modest net advantage for holiday letting.

For buy-to-let, council tax is typically the tenant's responsibility. For holiday let properties, the property may be assessed for business rates rather than council tax, and many qualify for Small Business Rate Relief, reducing this cost to £0. During void periods, the landlord pays council tax, so this is worth factoring into quieter months.

Upfront furnishing costs of around £13,500 for a 3-bedroom house also need consideration. This is a one-off capital outlay that affects your initial return calculations.

After Furnished Holiday Lettings Abolition, Tax Treats Both Strategies the Same in Leeds

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

Key tax considerations for Leeds investors:

• Mortgage interest relief: Restricted to a around 20% basic rate tax credit for both strategies. Higher rate taxpayers cannot deduct the full cost of mortgage interest, which materially affects leveraged returns.
• Stamp duty: A surcharge applies on additional property purchases. The exact rate is banded and varies; check current rates with your solicitor before calculating acquisition costs.
• Capital gains tax: Residential property gains are taxed at 18% (basic rate) or 24% (higher rate). With Leeds property prices generally below the national average, this is less of an immediate concern, but it affects exit planning.
• Allowable expenses: Repairs, insurance, letting agent fees, and ground rent remain deductible against rental income for both strategies.

The abolition of FHL means your strategy choice should be driven by operating returns and personal circumstances, not tax arbitrage. For a higher rate taxpayer with a mortgage, the restricted interest relief reduces net returns for both strategies, but the impact is proportionally larger on the lower-yielding buy-to-let.

Leeds Buy-to-Let Yields Outperform the UK Average

Comparison of key investment metrics.

Leeds offers higher rents than the Yorkshire and the Humber regional average, reflecting its status as the region's economic centre. Property prices are also higher than the regional average, but rents have kept pace, keeping gross yields competitive. Compared to the UK national average of 5.7%, Leeds delivers a stronger gross yield at 5.8%, driven by prices sitting below the national median while rents remain close to it.

For holiday let investors, Leeds benefits from a growing events and leisure economy. The city draws visitors for sport, music, business conferences, and its proximity to the Yorkshire Dales. That demand supports nightly rates around £165 and occupancy averaging 41%, though both vary considerably by postcode and season.

Yorkshire and The Humber rental market insights covers how Leeds compares to other Yorkshire markets. Investors considering northern cities may also find useful comparisons in other markets with similar dynamics. North Yorkshire Holiday Lets Double Buy-to-Let Gross Revenue Bradford Holiday Lets Yield 13.5% Gross, 117% Above Buy-to-Let

Investment Bottom Line: Leeds Rewards Suburb Selection Over Strategy

Leeds presents a compelling case for both holiday let and buy-to-let investment, but the real differentiator is not which strategy you choose; it is which postcode you buy in. The spread between the highest and lowest yielding areas is far wider than the gap between holiday let and buy-to-let net returns at the market level.

Holiday letting delivers a gross premium of approximately 55% over buy-to-let, but after operating costs, the net advantage narrows significantly. The break-even occupancy of just 27% provides a comfortable safety margin, but investors need to factor in the hands-on management and seasonal variability that come with holiday letting.

For investors who want simplicity and predictability, buy-to-let at 2.7% net yield remains a solid option, particularly in high-yield inner suburbs. For those willing to manage actively (or pay a letting agent to do so), holiday letting offers a higher ceiling, provided occupancy stays above the break-even threshold.

Data reflects market conditions as of April 2026. For more on how these figures are calculated, see our market score methodology and data sources.

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.