After All Costs, Westminster Holiday Lets Net Less Than Buy-to-Let

The gross holiday let premium for a 3-bed house in Westminster is -53% once the London 90-night cap is applied, meaning a holiday let actually grosses less than a buy-to-let before costs are even subtracted. After all operating expenses the picture deteriorates further. This article covers both a 3-bed house and a 2-bed apartment because the cost structures differ materially: apartments add service charges but enter the market at roughly a third of the house price.

Warning: holiday let figures apply only where legally permitted. Westminster falls under the Greater London 90-day rule from the Deregulation Act 2015. Properties without planning permission for change of use are capped at 90 nights of short-term letting per year. Airbnb automatically blocks bookings beyond 90 nights for London addresses. Operating beyond the cap requires planning consent from Westminster City Council.

The 90-Night Cap Caps Revenue Below Buy-to-Let on a 3-Bed House

A 3-bed house in Westminster sells for around £2,428,084 and rents for £5,328 per month, with an annual figure of £62,018. A holiday let at the local average nightly rate of £430 can theoretically gross £38,721 at full 90-night occupancy, but at the modelled occupancy of 77% the actual gross is £29,838. That is roughly half what a long tenant would pay over a full year.

The Airbnb host fee of 15.5% alone strips £4,625 off the top. Vrbo charges roughly 8%, and Booking.com closer to 15%, so platform choice matters but cannot rescue the headline. Buy-to-let costs are dominated by letting agent fees of £6,394 (the dashboard assumes around 10% of rent, which is typical for managed lettings in central London) and insurance of £2,705. The tenant pays utilities and council tax during occupancy on a buy-to-let, so those line items show as zero or close to it on that side.

What Eats the Premium on a Westminster House

Higher insurance and maintenance erode whatever gross holiday let revenue remains. Holiday let insurance of £6,212 runs more than double landlord insurance of £2,705 because of contents cover and public liability for short stays. Maintenance of £11,869 on the holiday let side already includes furnishing replacement, which is why it sits well above the £9,999 buy-to-let figure. Utilities of £2,148 fall on the host year-round.

The arithmetic is unforgiving. Even before any management cost, holiday let total operating costs of £36,994 exceed gross revenue of £29,838, producing a net loss of roughly £7,200. Buy-to-let nets £30,522 after costs, a yield of 1.3% on the £2,428,084 entry price.

The 2-Bed Apartment Math Is Closer, but Service Charges Hurt

A 2-bed apartment in Westminster sells for roughly £863,328, materially less than the £2,428,084 house. Rents per square foot are higher in apartments, so the rent ratio is more favourable. The catch is the service charge of £5,203 per year, a fixed cost that neither tenant nor holiday guest will reimburse.

The service charge sits in both columns because it is a property-level cost owed to the freeholder regardless of how the flat is used. Many Westminster blocks also restrict short-term letting through their leases, so before considering Airbnb on a flat the lease and freeholder rules need checking.

House vs Apartment: Apartment Wins on Yield, Loses on Absolute Cash

The apartment entry price of £863,328 is roughly a third of the house price of £2,428,084, and despite the £5,203 service charge the apartment buy-to-let net yield of 2.5% compares with 1.3% on the house. Holiday let yields move in the same direction: -0.3% on the apartment versus -0.3% on the house. The 90-night cap hits both property types equally, so neither escapes.

Absolute cash income is a different question. The house generates £30,522 of net buy-to-let income against £21,842 for the apartment. Investors chasing total income lean towards the house; investors chasing yield (and willing to accept the leasehold and service charge constraints) lean towards the apartment. Westminster is fundamentally an appreciation play in either form, with rental yield secondary to long-run capital growth.

Gross Break-Even Sits Above What the 90-Night Cap Allows

Holiday let revenue equals buy-to-let rent at a gross occupancy of 165% on a 3-bed house in Westminster. The market median is 77%, but more importantly, the regulatory cap of 90 nights per year means even 100% occupancy of every available night cannot mathematically reach the break-even point. The 165% figure is the floor a holiday let would need to reach against the 90-night ceiling, and a number above 100% means the cap forecloses the strategy.

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

Hiring a Holiday Let Manager Adds Around 18% of Gross

The tables above assume self-management on the holiday let side, which is the dashboard default. For a 3-bed house, hiring a professional holiday let manager adds roughly £5,371 per year (around 18% of gross revenue is typical for full-service holiday let managers in central London). Total costs rise to £42,365 and net yield falls to -0.5%, deepening the loss already shown.

For most absentee owners, professional management is not optional, given the volume of guest communication, cleaning coordination, key handover and compliance work involved. The practical implication is that the self-managed numbers in the table flatter the holiday let case. The real-world holiday let net yield for a Westminster owner who lives elsewhere is closer to the -0.5% figure.

FHL Abolition Removed the Last Tax Reason to Choose Holiday Letting

The Furnished Holiday Lettings tax regime was abolished from April 2025. Holiday lets and buy-to-let are now taxed equivalently for income tax and capital gains purposes, and mortgage interest relief is restricted to the basic-rate tax credit on both. The historic FHL advantages, full mortgage interest deduction, capital allowances on furnishings, and business asset disposal relief on sale, no longer apply. This makes the after-cost financial comparison between holiday letting and buy-to-let more important than ever, because there is no longer a tax structure quietly subsidising the holiday let route.

Stamp duty on a second home in Westminster is substantial at these price points; specific amounts depend on whether this is a first or additional purchase and on residency status, so check with your solicitor. Outside the 90-night allowance, converting a flat or house to use as a holiday let typically requires planning permission for change of use from Westminster City Council. These city medians cover all 75 postcode areas in Westminster, but individual postcodes diverge significantly. The dashboard shows the actual numbers for every Westminster postcode, every bedroom count and both property types.

For a comparison with another expensive London borough, London Rental Investment Insights examines the same after-cost picture in a different part of the capital. Maida Vale/Little Venice (W9) Tops Westminster Yields at 4.9% covers the same cost question for the highest-yielding postcode in the borough.

Methodology, including how rental rates, occupancy and operating costs are estimated, is published in our data sources documentation, and the scoring framework is described in the market score methodology.

Data reflects market conditions as of April 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.