Is buying a property for Airbnb worth it?

For the right property, in the right location, with realistic income expectations — yes. Short-term letting typically generates higher gross income than a comparable long-term let. In most major cities where Houst operates, a professionally managed two-bedroom property earns 1.5x to 2.5x the equivalent long-let income on a gross basis.

Whether it makes sense for a specific purchase depends on four things.

Location. Short-let income is highly location-dependent. A two-bedroom flat in central Manchester earns approximately £195 per night at 70% occupancy, generating roughly £49,000 per year gross. The same property in a low-demand suburb earns a fraction of that. The investment case for Airbnb is strongest in cities with year-round tourism, corporate demand and event-driven peaks.

Regulatory environment. London caps whole-property short-term lets at 90 nights per year. Paris caps at 120 nights. Dublin at 90 nights. These caps limit annual earning potential and require a hybrid model. Cities without night caps (Manchester, Edinburgh, Brighton, most Australian cities) offer more consistent annual income.

Property type and ownership structure. Leasehold properties in managed buildings may have restrictions on short-term letting. Melbourne and Sydney strata buildings can ban short-let use via Owners Corporation by-laws. Always check the lease, title conditions and any building rules before buying.

Costs. Airbnb investment requires higher upfront costs than a standard buy-to-let: professional furnishing, photography, specialist insurance and safety certifications. Ongoing costs include platform fees (typically 3-5%), cleaning between guests, maintenance and management fees if using a management company.

The ROI calculation: what you actually earn

Gross annual income from a professionally managed Airbnb property varies by market. Based on current Houst performance data:

UK:

• Manchester 2-bed central: approximately £195/night at 70% occupancy (~£4,100/month gross). No night cap. See the Manchester Airbnb income guide.
• Edinburgh 2-bed: approximately £7,400/month gross at 75% occupancy. No night cap; STL licence required. See the Edinburgh Airbnb income guide.
• Brighton 2-bed: approximately £210/night at 70% occupancy. No night cap. See the Brighton Airbnb income guide.
• London 2-bed: approximately £182/night at 81.5% across 90 nights, plus mid-term income for the remaining months. Average annual net revenue approximately £38,148 after Airbnb fees. See the London Airbnb income guide.

Australia:

• Melbourne 2-bed: approximately A$333/night at 70% occupancy (~A$7,000/month gross). The 7.5% levy applies. See the Melbourne Airbnb income guide.
• Sydney 2-bed: approximately A$561/night at 82% occupancy (~A$13,800/month gross). See the Sydney Airbnb income guide.

Against typical purchase prices, gross short-let yields range from approximately 5-7% in London (cap-constrained but manageable with a hybrid model) to 12-16% in Manchester and Edinburgh on an annual basis. These are gross figures before management fees, platform fees, insurance, maintenance and mortgage costs.

When Airbnb investment makes sense — and when it doesn't

It makes sense when:

• The property is in a location with demonstrable short-let demand (tourism, corporate, events)
• The property type suits the target guest
• There is no night cap, or the hybrid STL/MTL model compensates for the cap
• The lease and ownership structure permits short-term letting
• The gross yield at realistic occupancy exceeds the long-let alternative after costs

It doesn't make sense when:

• The property is in a low-demand area with poor tourism or corporate footfall
• A night cap applies and hybrid model income doesn't cover the mortgage and costs
• The Owners Corporation or lease prohibits short-let use
• The property requires significant refurbishment that pushes total investment above what the yield can justify
• The investor is not prepared for higher management involvement or management fees

A note on regulatory risk: short-let regulation is tightening in most major cities. London's night cap has been in place since 2015. Scotland introduced mandatory licensing in 2023. Melbourne introduced the 7.5% levy in 2025. Before buying for Airbnb in a regulated market, factor in the risk that future regulation could further restrict short-let use or impose additional costs.

Best UK and international cities for Airbnb investment

Based on Houst performance data, here is how the key markets compare:

Manchester. One of the strongest UK investment cases. No night cap, strong year-round corporate and events demand, relatively affordable entry prices compared to London. ADR approximately £195/night at 70% occupancy.

Edinburgh. High ADR, strong year-round demand amplified by the August Festival. No night cap, but a mandatory short-term let licence is required. The licence requirement creates a compliance barrier that keeps supply quality higher than in unregulated markets.

Brighton. Strong leisure and domestic tourism demand. ADR approximately £210/night at 70% occupancy. More seasonal variation than northern cities, with summer months significantly outperforming winter.

London. Highest nightly rates but cap-constrained. The investment case is strongest for owners who run a hybrid STL/MTL model to fill the non-Airbnb months. Best entry points are Zone 2-3 properties with strong transport links rather than Zone 1 premium prices.

Melbourne (AU). Strong year-round demand, high ADR (A$333/night), no night cap. The 7.5% levy applies from January 2025. Strata OC rules must be checked before purchase.

Sydney (AU). Highest ADR in the Houst portfolio (A$561/night at 82% occupancy). Strong investment case for properties near the CBD, beaches or event venues.

How to model your Airbnb investment return

Before committing to a purchase, work through this framework:

Gross income estimate. Use Houst’s ADR and occupancy data for your target city as a baseline. Adjust down for properties outside prime areas, and up for properties with features that command a premium (parking, outdoor space, strong views).

Deduct platform and management costs. Airbnb platform fee is typically 3% of booking value. Professional management typically costs 14-20% of nightly income. If self-managing, account for your time at a realistic hourly rate.

Account for voids and seasonality. Even at 70% annual occupancy, you will have empty nights. Model income at 60% occupancy as a downside scenario to stress-test the investment.

Factor in the night cap if applicable. For London, Paris and Dublin properties, model income using 90 or 120 nights of short-let income plus realistic mid-term income for the remaining nights. Do not model 365-night Airbnb income for a London property.

Compare against the long-let alternative. Pull a realistic monthly rent for a comparable furnished let in your target area. Compare net income after costs under both models.

The Houst Airbnb investment calculator models all of these variables for any property in Houst’s 27-city network.

Frequently asked questions

Is buying a property just for Airbnb worth it in the UK?

Yes, for the right property and location. Cities without night caps (Manchester, Edinburgh, Brighton) commonly achieve gross yields of 10-16% for professionally managed properties. London works with a hybrid STL/MTL model. Use the investment calculator to model your specific property before committing.

How much deposit do I need to buy an Airbnb investment property?

Most lenders require a minimum 25% deposit for short-let use. Some specialist lenders require 30-40%. Standard buy-to-let mortgages typically do not permit short-term letting, so specialist advice is needed before proceeding.

What are the risks of buying a property for Airbnb?

Regulatory tightening (night caps, licensing, levies), lower-than-expected occupancy, lease or OC restrictions discovered post-purchase, and higher operating costs than anticipated. Research regulations in your target city before buying and model income conservatively.

Is Airbnb better than buy-to-let in the UK?

For properties in high-demand short-let locations, gross Airbnb income typically exceeds buy-to-let. Operating costs are higher. In cities without caps and with year-round demand, the case for Airbnb over standard buy-to-let is strong for well-located properties.

Do I need a special mortgage for an Airbnb investment property?

Yes. Most standard buy-to-let mortgages do not permit short-term letting. A specialist holiday let or short-let mortgage is required. Always disclose intended use to the lender before proceeding.