How to Buy Property For an Airbnb Investment in 2025

Pros of Airbnb Investment

• High returns

Returns from Airbnb investments can be significantly higher than those from traditional assured shorthold tenancies. This is due to the high costs people will pay to stay in a quality short-term rental.

Say you purchase an apartment for £220,000, but your nightly fee is £200. From renting your property out for as little as 10 nights per month, you could expect a gross rental yield of 10.91%.

• High demand

In popular tourist destinations, Airbnb properties provide a more homely alternative to a hotel. When finding a place to stay that’s central, stylish, and comfortable, travellers can often get more for their money when choosing a short-term let for their trip compared to a hotel.

Research suggests that some groups actually prefer staying in an Airbnb, with around 30% of millennials reportedly choosing Airbnb instead of housing options due to the convenience of the location.

• Flexibility

Investing in Airbnb allows buyers more flexibility in the price they set for the property, when they rent it out and for what length, who they rent to, and what type of strategy they decide to pursue.

This is a big benefit to investors who want more freedom to control their investment.

Cons of Airbnb Investment

• More management

Due to the nature of short-term lets, investing in property for Airbnb results in more management than with a traditional assured-shorthold tenancy (AST).

While ASTs usually house the same tenant for a long period of a year or more, Airbnb properties could be let out to a different person every evening, which includes more administrative tasks and maintenance, such as cleaning in between stays.

• Extra operating costs

Operating costs for Airbnb investments include things such as paying for cleaning services, utilities, energy, and internet bills, and paying for potential damages. The Airbnb platform itself also requires a small fee, which is normally 3% of the booking revenue.

There are a number of legal requirements that investors of short-term lets need to be aware of before buying property for Airbnb. Be sure to factor the below requirements into your investment research to see if they apply to your short-term let investment.

Mandatory Property Registration

Short-term rental properties in the UK must be registered with local councils. This is to improve transparency and monitor the availability of housing in the area.

Planning Permission & Location Restrictions

For some UK areas, there are zoning laws that restrict the use of short-term lets and require landlords to have special permits to operate legally in restricted zones. For further information on UK planning laws, check out the official government website.

Occupancy & Business Rates

Short-term lets must meet minimum occupancy requirements in order to qualify for business rates, instead of council tax. These requirements include being let for at least 105 days, and being available for 252 days of the year in order to prevent abuse of tax reliefs.

Furnished Holiday Let Tax Regime Abolition

From April 2025, the tax regime for furnished holiday lets ended and these benefits such as capital allowances and capital gains relief were removed. For tax purposes, this aligns holiday lets with standard residential lettings.

HMRC Income Reporting Requirements

From January 2024, annual income from short-term lets became crucial for online booking platforms and agents to report to HMRC.

Health and Safety Requirements

To protect guests, hosts are required to make sure properties meet certain safety standards such as fire safety, gas and electrical certifications, and general health compliance.

Local Licensing Schemes

There may be local licensing schemes that apply to short-term lets in certain areas, so it’s important to check this for the area you’re considering making an Airbnb investment in to ensure you’re aware.