Dorset is one of the most profitable places in the UK when it comes to owning a holiday let, according to a new report.

Letting agency Sykes Holiday Cottages says properties in the county have annual incomes averaging £27,200.

This is compared to the UK average of £24,500 - making the region the third most profitable area in the country.

The Cotswolds takes the top spot with an average annual income of £28,500. 

The latest available figures from the March 2021 census show that in some parts of Dorset, one in 13 houses are holiday homes.

The figures showed there were approximately 2,490 holiday homes in the county.

Sykes also says bookings to its properties in the region were up 48 per cent year-on-year in 2023, as more people choose to 'staycate'.

The Holiday Letting Outlook Report 2024 analyses Sykes Holiday Cottages’ revenue data and booking figures to examine the income potential of holiday letting in the UK.

A survey was also conducted to gauge opinions on recent regulatory and tax changes.  

According to a poll of 500 UK holiday home owners commissioned for the report, 65 per  cent are worried about the recent changes introduced to the sector, with increased taxes causing the most concern. 

From April 2025, the furnished holiday lettings tax regime will be abolished, meaning short-term and long-term lets will be treated the same for tax purposes.

Despite this, the majority (86 per cent) of holiday let owners have not ever considered exiting the market, with half of owners even contemplating buying another holiday let in the future regardless of the changes.  

Holiday let owners also have reason to remain optimistic as the demand for staycations is still growing, with bookings for Sykes’ lets over the recent Easter school holidays up 11 per cent compared with last year. 

Graham Donoghue, CEO, Sykes Holiday Cottages, said: “Staycations have been growing in popularity over the past decade and right now demand for our UK holiday cottages in Dorset is higher than ever, with the average annual income of a holiday let owner up as a result. 

“But of course, the past 12-months have been slightly different for the industry, and our latest report therefore also reflects how holiday let owners are feeling in light of the recent changes."