The way people use property in Britain has changed. Second homes and short-term lets have moved from the edges of the market into the mainstream, and that shift is reshaping the council tax base in hundreds of local authorities.

We have spent the last few months examining what this means for councils, and what the new premium powers introduced under the Levelling-up and Regeneration Act 2023 actually allow. The result is our new report, The Hidden Housing Economy: How second homes and short lets are reshaping council tax revenue. Follow us as we explore these topics in depth in a series of articles.

A nation on the move

The rise of the second home and short let economy

The UK’s relationship with the second home has changed dramatically over the past decade. What was once the preserve of the wealthy has, in many coastal and rural communities, become part of the mainstream property market, driven by changing disposable incomes, the rise of remote working, and the explosion of platforms like Airbnb, Vrbo, and Sykes Holiday Cottages that made short-term letting more accessible and profitable.

The story so far

The numbers tell a striking story. As of December 2025, there were over 441,000 active short-term rental listings across the UK, a rise of around 30% since 2019. In some local authority areas (the Welsh and Cornish coastlines, the Lake District, parts of the Scottish Highlands) short-term lets now account for a significant proportion of the overall housing stock.

In Eryri (Snowdonia) National Park, 17.4% of all housing stock is now classified as second homes or short-term holiday accommodation. This has driven the council’s decision to introduce Article 4 planning controls to require permission for any future change of use.

Critically, even this figure is believed to understate the true picture: the Authority’s own SPG Consultation Report acknowledges that short-term let data is “highly dynamic, with properties being withdrawn and added at different points throughout the year”, meaning the real extent of holiday accommodation use is difficult to capture in any single snapshot.

The picture in Eryri isn’t an outlier. Across England and Wales, the same forces are reshaping housing use in tourist destinations, coastal communities, and market towns alike.

Understanding what’s driving that shift is the first step to responding to it effectively.

What’s driving the boom?

Four forces have combined to accelerate the trend.

The Airbnb business model

Short-term letting has become an accessible income stream. In 2023-24, around 130,000 UK landlords declared furnished holiday letting income totalling £2.43 billion, a 60% rise since 2019-20 and more than three times the growth in wider rental income. The per-landlord average is £18,700, but Sykes Holiday Cottages research puts returns above £28,000 in both the Cotswolds and the Lake District.

The pandemic effect

Covid-19 triggered a surge in domestic tourism that hasn’t fully unwound. Restrictions on international travel introduced millions of people to UK destinations they’d previously overlooked, and property investors took note. UK residents took 106 million overnight domestic trips in 2024, spending £32.9bn across Great Britain, a baseline that continues to underpin the investment case for short-term letting.

Remote working and lifestyle migration

The ability to work from anywhere has prompted a broader rethink of where people want to live and own property. Second home ownership is no longer just about holidays. For many it has become an investment in a different kind of life, with coastal and rural properties doubling as both personal retreats and income-generating assets.

Increases in staycations

UK holiday demand has held up despite cost-of-living pressure. ABTA’s Holiday Habits 2024-25 reports that UK adults took an average of 3.94 holidays in the year to August 2024, the highest level since records began in 2010. Consumer Intelligence reported in July 2024 that convenience and UK exploration are the leading reasons, with budget and pet-friendliness also cited. That sustained demand supports short-let yields.

The community cost

This shift has had real consequences across England and Wales. In many coastal and rural communities, the concentration of second homes and short lets has squeezed housing availability for local residents, driving up prices and reducing long-term rental supply. ONS data shows house prices in Cornwall stand at around eight times local full-time earnings, well above what most working households can sustain. In the Lake District, 27% of properties are second homes or holiday lets. And in North Norfolk, which has the second-highest proportion of second homes in England after the City of London, second homes account for 8% of council tax homes, with a further 4.5% of all homes registered as holiday lets.

It’s a similar story in Wales, where local authorities reported approximately 22,000 second homes liable for council tax in 2024-25, with pressures particularly acute in Gwynedd and Pembrokeshire. Taken together, these figures help explain why second home ownership has moved firmly into the political spotlight and created the conditions for the legislative changes that followed.

Next in the series, we turn to the policy response, and what the law now allows councils in England and Wales to do.

The full report, The hidden housing economy: how second homes and short lets are reshaping council tax revenue, sets out the full picture. Download the full report.

If you would like to talk through what it means for your authority, contact us.