New research published by UncommonDeal has identified Edinburgh as the UK’s leading short-term rental investment market for 2026, with Cambridge and Bath also ranking among the strongest locations for investors seeking high occupancy rates, attractive nightly pricing, and consistent year-round demand.
The analysis examined major UK short-term rental markets using a range of factors including occupancy rates, average daily rates (ADR), annual revenue potential, tourism demand, business travel activity, affordability, and regulatory considerations.
According to the research, investors are increasingly moving beyond headline nightly rates and focusing on occupancy and annual revenue performance when assessing potential opportunities.
The study found that a market charging premium nightly rates does not always produce the strongest investment returns if occupancy levels are weak. Conversely, some locations with lower nightly rates can outperform higher-priced markets by maintaining stronger year-round demand.
Edinburgh secured the top overall position due to its combination of tourism demand, major annual events, business travel, and consistently high occupancy levels. Cambridge ranked second, supported by strong demand from universities, research institutions, corporate visitors, and international travellers. Bath completed the top three, benefiting from premium pricing and a well-established tourism sector.
The report also highlighted Manchester and Liverpool as attractive alternatives for investors seeking affordability and stronger cash-on-cash returns. While these cities may generate lower headline revenues than some southern markets, lower property acquisition costs can improve overall investment performance relative to capital invested.
The research identified several key drivers behind the continued growth of the UK’s short-term rental sector, including increasing demand from business travellers, relocation clients, contractors working on infrastructure projects, university visitors, and domestic tourism.
Professional serviced accommodation operators are also playing a growing role in the market. The sector has increasingly shifted away from casual hosting towards professionally managed accommodation businesses focused on guest experience, dynamic pricing, operational efficiency, and multi-platform marketing.
The report further noted that investors should remain aware of regulatory developments affecting the sector. These include London’s 90-day rule, Scotland’s short-term let licensing requirements, and the potential for additional local authority restrictions in some areas.
Alongside revenue potential, the research encourages investors to assess occupancy rates, property acquisition costs, operating expenses, regulatory risks, and long-term demand fundamentals before committing capital to any short-term rental investment.
The full analysis compares leading UK short-term rental markets and provides detailed insights into revenue potential, affordability, market drivers, risks, and investment considerations for 2026.
