A Lake District village is generating £45,900 a year for holiday let owners – nearly £20,000 more than the UK average – as new data reveals the most lucrative hotspots in 2026.

Analysis by Sykes Holiday Cottages shows that countryside and year-round destinations are now outperforming traditional seaside locations, as demand shifts towards more flexible, off-peak UK travel.

The top 10 highest-earning locations, ranked by average annual income, highlight where holiday let owners are generating the strongest returns.

Leading the rankings once again this year is Grasmere in the Lake District, where holiday let owners generated an average income of £45,900 in 2025 – up from £43,200 in 2024 and significantly above the UK average of £25,600.

Elsewhere, established tourism hotspots including Bowness-on-Windermere (£36,200), Ambleside (£34,800) and Castleton (£38,200) also feature among the top-performing locations, reflecting sustained demand for destinations offering access to countryside and year-round attractions.

Castleton in the Peak District has seen one of the biggest rises, climbing from eighth place in 2024 to second in 2025, reflecting growing demand for year-round countryside destinations.

The findings form part of Sykes’ latest Holiday Letting Outlook Report, which analyses bookings and revenue data from more than 25,000 UK holiday rentals.

Why these locations are outperforming

According to the report, the UK’s highest-earning holiday let hotspots share several key characteristics – most notably year-round appeal, strong tourism infrastructure, and proximity to natural or cultural attractions.

Locations such as Matlock and Castleton benefit from their position as gateways to the Peak District, attracting walkers and families throughout the year and supporting consistently high occupancy rates.

Meanwhile, coastal destinations like Aldeburgh and Warkworth are seeing renewed demand as UK travellers continue to favour seaside breaks, particularly in family-friendly locations with broad seasonal appeal.

Historic cities such as Durham and Chester are also proving resilient, combining heritage, retail and dining to drive reliable short-break demand across multiple visitor groups.

Year-round bookings driving higher returns

A key factor behind rising earnings is the shift towards year-round bookings, with owners increasingly focused on maximising occupancy outside of peak seasons.

Sykes’ data shows that locations with strong all-season appeal are delivering the most consistent returns, while owners who adapt their offering are seeing further gains.

Accepting short breaks and multiple bookings per week can generate 25% more revenue on average, while pet-friendly properties secure 16% more income and homes with hot tubs can earn up to 40% more annually.

At the same time, demand for UK breaks remains robust, with 2025 marking Sykes’ biggest year on record for bookings, and early 2026 bookings already tracking ahead year-on-year.

A resilient investment market

Despite ongoing regulatory changes and cost pressures, the holiday let market continues to show resilience, with 83% of owners confident in the future profitability of their investment and 60% expecting demand to grow over the next year.

James Shaw, Chief Commercial Officer at Sykes Holiday Cottages, said: “What we’re seeing now is a clear shift in what makes a holiday let successful. It’s no longer just about peak summer demand – the highest-earning areas are those that can attract visitors year-round.”

Read the full report here.

Top 10 highest-earning holiday let locations in 2026: