We purchased this cottage in Derbyshire for £155,000… this is precisely how we turned it into a vacation let that pays us £35,000 a yr

When Sarah D’Arcy noticed the house next door go on sale four years ago, she spied an opportunity.

The Victorian two-bedroom semi-detached house in Matlock, on the edge of the Peak District, was going for just £155,000 as it needed a good bit of work.

Sarah and her husband Jamie Turton, both aged 53, snapped it up. Within months they had transformed it into a holiday let, bringing in more than £35,000 a year.

Their choice was a savvy one, as the Derbyshire town has been named the UK’s number one holiday let investment hotspot by rental agency Sykes Holiday Cottages thanks to its year-round appeal for holidaymakers.

Today, as flights are cancelled and air fares rise due to the Iran war oil crisis, holiday let owners are noticing a sharp uptick in bookings. Growing numbers of families are opting to stay in Britain instead of flying off for their upcoming holidays.

Accommodation booking website Airbnb has already seen a 15 per cent year-on-year increase in domestic bookings.

Property management company HelloGuest says ‘demand for domestic holidays is stronger than ever’, with holiday lets yielding 8 per cent on average – higher than the 6 per cent average for traditional buy-to-lets.

But getting a good yield – the annual return on your initial investment, expressed as a percentage – involves more than just finding a popular location and watching the bookings roll in. Here, Sarah and Jamie share the secrets of how they turned a holiday let into a valuable business.

Pick a location with appeal all year round

Matlock enjoys stunning scenery thanks to the Derbyshire Dales and Peak District National Park on its doorstep, but – crucially for a profitable holiday let – it has year-round appeal.

Even in winter months, bookings remain high because it has thermal waters for spa and beauty treatments, as well as plenty of tourist-friendly boutique shops, coffee houses and restaurants.

Sarah and Jamie, who have a 13-year-old daughter, moved to the town in 2012, buying a three-bedroom house.

When they discovered the run-down neighbouring house was up for sale, they went for it.

They tightened their belts and took out a special holiday let mortgage with Principality for more than £100,000, where rates are typically about 2 percentage points higher than a traditional home loan as they are deemed riskier.

The couple then rolled up their sleeves and completed a renovation in nine months, on a property hardly lived in or touched for 50 years.

Former occupational therapist Sarah, who quit her job to run the holiday let, says: ‘Being next door was a godsend. We could spend our spare time working on it by just popping in whenever we liked.’

Holiday rentals in Matlock earned owners an average of £34,000 last year – a third more than the typical income across the rest of the country – and, according to Sykes Holiday Cottages, there has been a 14 per cent year-on-year increase on bookings per property for landlords, with typically 46 a year.

Over a full year the average income in the area works out at £654 a week. Sarah and Jamie are able to earn a typical £693 a week. They charge between £350 a week in the depths of winter up to £1,300 in the peak summer season. The typical letting is for three or four days and it is occupied about 75 per cent of the time.

Keep renovation costs under strict control

Despite paying only £155,000 for the property, the couple had to find the money for major renovations that pushed the total cost to around £215,000.

Fortunately engineer Jamie has electrician and plumber contacts who were able to help them create a modern kitchen and bathroom. This was vital to ensure that the building met safety guidelines and passes annual rental checks for gas and electricity – but it cost the couple about £20,000.

They saved money by not splashing out on designer bathroom and kitchen fittings, but by buying cheaper units from DIY centres such as Wickes and installing much of it themselves.

Jamie recalls: ‘It was actually quite fun gutting the old property and bashing the walls back to the bricks. I really enjoyed swinging a huge mallet to destroy old fixtures and fittings before taking them to the skip.

‘But the work was hard and time consuming. We put our lives on hold and spent evenings and weekends working on the house to make it ready for occupation.’

Installing a remote-controlled Hive thermostat proved a shrewd financial move – enabling the heating controls to be set by the couple, so that guests are not putting the thermostat up too high or heating the house when out. Jamie says: ‘We make sure it is easy for guests to contact us so they can change the settings if required.’

Gas and electricity total £2,400 a year, home insurance £600, hot tub maintenance £350, and wifi with a TV licence is £500.

The Government abolished a Furnished Holiday Lettings (FHL) tax break in April last year so holiday let owners can no longer deduct mortgage interest from income for tax purposes, claim a capital allowance for furniture, fixtures and fittings, or claim Business Asset Disposal Relief for holiday lets. This eats into profits, making it even more important to find a property that makes a good return.

Five-star reviews from thoughtful touches

Little touches can make guests feel at home and more likely to return – as well as be willing to pay a premium.

When guests turn up at Sunnyside Terrace, they are met with a ‘welcome hamper’ of milk, biscuits, crisps and a bottle of prosecco. And in the kitchen cupboards is a ready supply of coffee, tea and hot chocolate.

A couple of flasks have also been left out so visitors can enjoy a warm drink when they head out on a hike.

And Sarah leaves spare toothbrushes and a packet of paracetamol in case guests have forgotten to pack their own.

She says: ‘You want guests to be able to turn the key and when they walk inside feel straight at home, with all the immediate conveniences already there to enjoy.’

To keep ever-demanding guests happy – and encourage those all-important five-star reviews –everything must be kept spick and span.

After each visit Sarah spends a minimum of five hours cleaning up – including deep carpet cleaning and minor redecoration if required. Bed linen and towels are replaced with new sets every year.

The luxuries that can help you to stand out

A £5,000 hot tub has been installed in the garden, which is checked by Jamie up to twice a day to ensure it is always clean.

According to Sykes Holiday Cottages’ research, properties with a hot tub earn 40 per cent more a year than those without. Sarah and Jamie believe it enables them to stand out from others – though Jamie admits maintenance can be time consuming.

He says: ‘We change the water – which is about 2,000 litres – every time we have a new set of guests. The PH, chlorine and heating levels must be constantly checked.’

Kiln-dried logs are supplied for the wood burner, and Jamie comes over to show guests how to light a fire if needed.

At first the couple did not want guests to bring pets, fearing they could cause damage and require extra cleaning. But they soon realised they were missing out on a lucrative part of the market, with many guests keen to enjoy walking around the Peak District with their dogs.

Accommodation that accepts pets earns on average 16 per cent more, according to Sykes Holiday Cottages.

Understand what you can offer customers

The Holiday Letting Outlook Report was compiled by analysing the bookings of more than 23,500 holiday rentals let through Sykes in 2025 – and it shows the importance of year-round appeal.

Holidaymakers are attracted to many areas not just when the sun is out during the summer, but for winter breaks as well.

Castleton in Derbyshire, which is home to 11th century Peveril Castle, had the highest number of bookings last year. Holiday lets here averaged 51 bookings over the 12 months.

Despite Matlock being named the number one spot, the Lake District region of Grasmere was the most lucrative, with holiday lets there coining in £49,900 on average last year. But it is more seasonal, with usually less than 40 bookings a year.

The most popular property types for holidaymakers are detached houses – bringing in £32,700 a year on average. Typical yearly costs include £1,190 for cleaning and getting a home ready for changeovers, £1,580 for maintenance, and £2,140 for gas and electricity.

Holiday let platforms typically take a cut of any earnings. Sykes, for example, typically takes around 20 per cent.

There is also the income tax to pay on earnings at your marginal rate – 20, 40 or 45 per cent for basic, higher and additional rate taxpayers respectively.

What are your secrets to a profitable holiday let? Email [email protected]