Increasingly, in this economic climate, it’s not the widescreen panoramas of turquoise seas or olive-grove-strewn hills that melt the hearts of secondhome seekers, but a property’s rental yield.

During 2008, holiday-home landlord numbers grew by a staggering 84%, according to research by Holiday Lettings, a UK-based holiday-homes website. The number of owners deciding to rent their second homes rose from 30% of those surveyed in 2007 to 43% in 2008.

Even the most reluctant renters, who baulked at the very thought of strangers lounging about their homes, have come to see rental income as a way to mitigate costs, especially as some of the pain can be relieved by charging rents in the local currency. ‘Things have changed dramatically,’ states James Price, partner at Knight Frank. ‘There are people who wouldn’t have dreamed of renting their properties a year ago who now take a more circumspect view of things.’ Some professionals have embraced this changing attitude with gusto. Last December, Knight Frank and the travel agent CV Travel, which specialises in luxuryvilla rental, formed a partnership to serve both owners and holidaymakers, initially in the Chianti region of Tuscany.

‘We’re looking at a two-sided office because the process of renting or buying a holiday home is so very closely connected,’ says Debbie Marshall, managing director of CV Travel. ‘Clients who rent villas through us often go on to purchase one in the same area. Those who purchase villas are often looking to rent it. It goes hand in glove. And today, with the exchange rate being what it is, clients have to be much more realistic they are, at least, looking to cover all of their outgoings.’

‘Proportionally, rents are going to get stronger as the sales price falls,’ says Charles Weston Baker, head of international sales at Savills, many of whose associate offices are surviving thanks to a strong short-term rental demand for villas as sales fall away. Most of the second-home owners who rented out villas for the first time in 2008 did so to cover costs, reckons Mr Weston Baker. With the average villa in the Eurozone costing several thousand Euros a year to run, and most owners in the UK earning their money in sterling, the falling pound as hit homeowners in the Eurozone hard, and many are now charging clients in Euros. ‘Running costs have spiralled,’ he adds. ‘Most who rent are not doing so to make money, but to cover their outgoings.’

When it comes to where the highest rental returns are found, several factors need to be taken into consideration. It’s worth studying the prices achieved by the high-end tour operators, both on or off season, before making your decision. ‘At the top end, the most popular rental destinations are also the most popular property-owning destinations,’ says Mr Weston Baker. Outside of the Caribbean, the largest potential market is the Mediterranean, and top of the high-end rental wish list is the north-east coast of Corfu, specifically ‘anywhere close to San Stefano,’ says Mrs Marshall. Corfu’s longstanding allure for the aristocracy, fashionable society and captains of industry, most recently demonstrated by the ‘three men on a boat’ shenanigans involving George Osborne, Peter Mandelson and a Russian oligarch that drew attention to Lord Rothschild’s villa on the island, has pushed prices up to levels normally associated with the French Riviera and the Caribbean.

‘The season on Corfu runs from April through to October,’ says Luis Florez of Meon Villas, specialists in villa holidays. ‘In early May, a decent villa in a key location rents for about £650 per week. In August, the same villa would rent for closer to £2,000.’ Not that making a mint out of your dormant Mediterranean villa is going to be as easy as handing an agent the keys. ‘Most of our clients don’t want to see other people’s family photographs on the mantelpiece when they rent a villa,’ says Mr Florez. ‘And some people’s personal taste leaves a lot to be desired.’

Critically, your villa should be detached, in a decent plot of land and blessed with a swimming pool, a terrace for outdoor dining and fantastic views. A high level of personal service from housekeeping to concierge (most of which an agent will oversee for you) is crucial. Most clients today also want to be able to tune into the match on a Saturday. Mr Florez and Mrs Marshall both stress (a little regretfully) that a Sky box, a DVD player, an iPod port, broadband and a plasma-screen television are becoming as important to rental clients as glorious vistas. After Corfu come the Balearic Islands, notably Mallorca. Like a character actor who steals a show, Mallorca’s place on the international stage has eclipsed that of mainland Spain. It now heads discerning Britons’ wish lists for both luxurious holidays and property ownership.

The rental season stretches from the end of March to the end of October. ‘In high season, a decent villa in Mallorca will rent for about £3,000 per week,’ says Mr Florez, who reckons that the north coast close to Pollensa is the most sought-after area. ‘Being close to one of the sandy beaches is very important.’ In the last year, CV Travel has also seen a sharp increase in bookings for the nearby island of Ibiza. ‘Ibiza is a much wider market than anyone thinks,’ says Mrs Marshall. ‘It is a great, fun place for families, and villa rental is all about appealing to the family.’ Year-round resorts tend to yield the highest rental returns.

Within Europe, Mr Florez reckons that the kings of year-round bookings are Cyprus, especially near Paphos, and Lanzarote in the Canary Islands. A decent villa in Paphos fetches about £1,700 per week in the July– August peak, but still yields about £750 in January and February, when most other parts of the world have shut up shop. Rents for a similar property in Lanzarote are about £1,400 in August and £800 in October and November. ‘It’s worth looking at year-round locations, as most owners want to use their own villas for themselves in the key parts of the year, such as the school holidays,’ Mr Florez explains. ‘With a year-round location, you can double up on the rental, and also your money.’

Tuscany and Umbria in Italy and scenic parts of south-western France, such as Languedoc and Dordogne, are good examples of holiday-home destinations popular with second homers, but with limited earning potential out of season. Meon Villas bookings also show a year-round high demand for the Algarve region of Portugal, especially for villas on resorts with golfing facilities that are close to beaches. In the August peak season, you can expect to earn about £4,000 per week for a good villa that will still bring in £1,000 in January. Such properties critically have the flexibility to be all things for all seasons. As well as good weather, look for great amenities nearby beaches, water-sports, and, above all, golf courses.

Similarly, ski chalets, especially in the French Alps, that now offer a multitude of invigorating outdoor activities during the summer, attract good year-round rental yields. The opposite of those destinations that draw their heads in and hibernate in winter are those where the party or the corporate bandwagon rolls into town. Venice not only hosts its thrilling ‘masked’ carnival in February, its cultural pageant includes the Venice Film Festival and bi-annual arts and architecture Biennale.

‘Venice is a city rather than a holiday destination, but if it’s a nice property with a terrace and in good condition you can get 25–30 weeks’ annual rental and about €2,000 per week during the carnival,’ says Ann- Marie Doyle of Venice Estates. Similarly, the succession of exhibitions and events based in Cannes during the year, from MIPIM and MIDEM to the frenzied glamour of Cannes Film Festival, can push rental returns up into the upper stratosphere. ‘You can earn about €30,000 per week for a villa close to the Croisette during the film festival,’ says Jean-Claude Caputo, managing director of Riviera Estates.

The trouble is, aside from the mouth-watering rental returns, would anyone, apart from an ice-cream salesman, really want to live in a home close to the Croisette in Cannes during peak season? The outright winner of the world rentalyield competition has to be Barbados, where clients descend from the US as well as Europe. There, they don’t refer to rents in terms of a weekly but a ‘nightly’ basis. ‘Think about $1,850 per night for a top villa in the peak season (December 14 through January 4),’ says Richard Eames, owner of Island Villas, Savills’ associate in Barbados.

The same villa would rent for about $850 per night during the winter, and $650 per night during summer. Critically, Barbados is (more or less) a year-round holiday destination. Other key Caribbean islands such as Grenada and St Lucia also command high rentals, but they don’t compare with Barbados, believes Mr Eames. ‘Barbados has British Airways and Virgin Atlantic flying in three times a day in peak season,’ he says.

‘Our rental business has never been stronger because all of the potential buyers are sitting on their hands and waiting to see what happens.’ Today, owners and potential second-home purchasers are taking a more pragmatic approach: to hell with the romance of it all, the house has got to pay its way.

Villa rental hotspots

1. Barbados

2. Corfu

3. Mallorca

4. Ibiza

5. Cyprus

6. Venice