Cornwall’s property market in late 2025 is at a crossroads. Investors are weighing the appeal of holiday lets against the stability of buy‑to‑lets, all while navigating new tax rules, council premiums, and affordability pressures. With tourism still driving 15% of the local economy and hotspots like St Ives, Falmouth, Truro, and Newquay commanding premiums, the choice isn’t just about yields, it’s about aligning your investment with your goals, risk profile, and community impact
Cornwall Holiday Let Mortgages in 2025
Holiday lets are run as active businesses, targeting tourists through platforms like Airbnb or agencies such as Unique Homestays. They can deliver superior returns but require proactive management, marketing, and handling of seasonal variations. Owners also enjoy the perk of personal use during quieter periods.
- Elevated gross yields (8–10%)
- Flexible pricing amid demand
- Personal use options
- Accelerated capital gains in tourist hubs
Cons:
- Demanding management
- Exposure to tourism fluctuations (visitor numbers dipped 10–12% in 2024–25)
- Heightened taxes and compliance post‑FHL reforms
Buy‑to‑lets are viewed as reliable assets with tenants under Assured Shorthold Tenancies (ASTs) for 6–12 months or longer. They provide consistent income with less day‑to‑day involvement, though growth may be steadier rather than explosive.
Pros:
- Predictable cash flow
- Hands‑off with agents
- Long‑term appreciation
- Robust tenant safeguards
Cons:
- Moderate yields (3–7% gross)
- Rent increase limits
- Potential eviction hurdles
- Restricted personal access
Property prices have risen modestly: Cornwall's average reached £289,000 in August 2025 (up 2.9% YOY), with coastal areas like St Ives commanding £507,000 for average asking prices, a premium reflecting demand for sea-view properties, which add £88,000 on average. The housing crisis persists, with second homes contributing to shortages, prompting regulatory measures that have cooled speculative buys while emphasizing local needs.
Tax and Council Rules for Cornwall Property Investors
- Abolition of Furnished Holiday Lettings (FHL) Regime (April 2025): Holiday lets now mirror residential tax rules, eliminating full mortgage interest deductions and capital gains reliefs. Taxes rose 20–40% for higher‑rate taxpayers.
- 100% Council Tax Premium (April 2025): Second homes not used as primary residences or commercially let face doubled bills, expected to generate £24 million for Cornwall Council.
- New C5 Planning Class: Converting residential properties (C3) to short‑term lets requires permission in controlled areas, adding layers of review and risk.
Holiday Let vs Buy‑to‑Let: Yield Comparison in Cornwall
Based on a typical 3-bedroom coastal cottage in St Ives or Falmouth at £450,000 (reflecting November 2025 coastal premiums). Assumptions: Holiday lets at 61% occupancy with £180-£220 nightly rates (ADR $220 equivalent); buy-to-lets at £1,200-£1,379 pcm, amid 7% YOY rent growth.
| Aspect | Buy-to-Let (Long-Term) | Holiday Let (Short-Term) |
|---|---|---|
| Gross Annual Income | £16,548 (£1,379 pcm) | £35,000-£45,000 (Avg. £200/night at 61% occupancy) |
| Management & Fees | Letting Agent (10%): £1,655 | Agency (20-25%): £7,000-£11,250 |
| Running Costs | Maintenance, Insurance, Voids: £2,000 | Cleaning, Utilities, Marketing: £7,500-£9,500 |
| Council Tax / Rates | Standard: £2,200 | Premium: £4,400 (if <70 days); Business: £0-£2,000 |
| Net Income (Pre-Tax & Mortgage) | £10,693 | £16,000-£24,250 |
| Gross Yield | 3.7-5.5% | 7.8-10.0% |
| Net Yield (Est. Post-Tax) | 2.8-4.0% | 4.5-7.0% |
Critical Context: Holiday lets can outperform BTL by 30-50% in gross income, but success ties to occupancy, target 70%+ to counter post-FHL taxes. Mortgages for holiday lets run higher (4-6%). The hybrid approach, peak-season short-terms shifting to mid-term winter lets (1-6 months) for remote workers, enhances resilience, meets thresholds, and stabilizes revenue. Coastal capital growth: 0.6-5% YOY.
Local Hotspots: St Ives, Falmouth, Truro, and Newquay
- St Ives: Premium coastal demand, average asking prices £507,000.
- Falmouth: Strong student and tourism mix, resilient occupancy.
- Truro: Inland stability, lower entry costs, consistent buy‑to‑let demand.
- Newquay: Popular with surfers and short‑break tourists, strong Airbnb presence
Which Cornwall Investment Strategy Fits You?
- Choose Holiday Lets if: You’re entrepreneurial, comfortable with variability, and focused on coastal gems. Aim for 70%+ occupancy to net 5–7%.
- Choose Buy‑to‑Lets if: Stability is key. Target inland spots like Truro for steady demand and 3–5% net yields plus capital growth.
Conclusion
As 2025 winds down, Cornwall’s property market rewards informed agility. Holiday lets promise strong yields in a resilient tourism scene, while buy‑to‑lets offer dependable foundations. The right choice depends on your appetite for risk, your operational style, and your awareness of Cornwall’s housing challenges.