Ultimate Guide to Serviced Accommodation Investments

So, what is serviced accommodation?

Serviced accommodation is the meeting point between long-term buy-to-let accommodation and hotels. It was formerly known as ‘aparthotels’. They are fully furnished properties rented out to tenants for a short-term period and include amenities that you’d expect from a hotel at a cost.

Unlike traditional buy-to-let properties, where the most common type of contract is an assured shorthold tenancy (AST), which allows the tenant to let the property for between 6-12 months, serviced accommodation allows the guest to decide how long the occupancy will last.

Serviced accommodation gets its name because the resident is offered “services” for staying in the property. Some of the services that may be included are:

• Housekeeping
• WiFi
• Laundry
• Concierge services

The services provided depend on the landlord and the property, with some offering a bespoke experience similar to that of high-quality hotels.

This option is popular with those seeking a shorter stay than renting, as it combines the services of a hotel with the personal space and privacy of an apartment or house.

While you may not have heard of the term serviced accommodation before, you’ve probably heard of one of the largest providers of it. Airbnb is one of the most popular ways for travellers to find accommodation nowadays and has grown massively in recent years.

Indeed, many properties intended for buy-to-let investment, such as HMOs, have been converted to serviced apartments as property owners seek the higher returns that serviced accommodations can offer.

Serviced accommodation can take many forms, with popular options including apartments, houses, cottages, caravans, and even houseboats.

Some serviced accommodation examples are apartments intended for short stays that provide guests with everything they may need. They are fully furnished and usually come with a fully equipped kitchen area and utensils for self-catering options.

Landlords of serviced apartments provide all the amenities and services you would expect from serviced accommodation, and again, this can differ depending on what they want to offer.

Serviced apartments in the UK are gaining popularity due to the extra space they offer compared to a hotel room and the privacy of a whole apartment. Serviced apartments are usually cheaper than hotels for a similar length of stay.

Are Serviced Apartments a Good Investment?

So, is serviced accommodation a good investment to consider?

With the rising popularity of serviced accommodation, many property investors are weighing the pros and cons of this investment strategy to determine whether it is best suited for them.

There are some major differences between serviced apartments and traditional buy-to-let apartments, as you will see a much higher number of tenants over a similar period due to the shorter letting periods of serviced accommodation.

In busy periods, serviced accommodation in the UK can see much higher profits than standard buy-to-let properties; however, they come with higher costs, and you are more at risk of experiencing periods with no guests or income.

There are various benefits and disadvantages to serviced accommodation investments, which we’ll break down here:

The Benefits of Serviced Accommodation Investment

• You can usually charge a higher fee per night for serviced accommodation compared to buy-to-let properties, so your profits are likely to be higher if the property is consistently booked.
• There is a higher guest turnover, meaning you enjoy more rental yield than a long term let.
• There is far more flexibility with serviced accommodation, as guests can stay for a few days or a longer period, depending on their booking.
• It can be quicker and easier to sell serviced accommodation, as you likely won’t need to wait for a tenant to finish their tenancy.
• There are more unique and stylish properties available as serviced accommodations in the UK than ever, giving guests a more bespoke experience than a hotel can provide.
• You can adjust your rates depending on the season, so if tourism in your area is high in summer, you can raise the rent to take advantage of this.
• The serviced accommodation market is growing fast.

The Drawbacks of Serviced Accommodation

• There can be higher costs for serviced accommodation, including fully furnished properties, housekeeping, and services such as WiFi.
• There can be longer void periods without tenants if you rely on tourism for your income, while you will still have to pay the higher charges.
• If you aren’t selective on who you lend the property to, guests may book serviced accommodation for parties or other activities, which could damage the furnishings.
• Looking for guests more regularly may mean higher marketing costs, as you are constantly having to advertise the property online.
• Some areas of the UK, such as London, only permit landlords to operate their properties as holiday lets for a limited number of days per year.

These key points summarise the main pros and cons of serviced accommodation. Still, there are also some other issues you need to be aware of, which may not occur with buy-to-let properties, such as setting up a remote pick-up/drop-off box for keys unless you have the time to meet every guest.

If you’re considering a property investment, it’s worth looking at a more hands-off serviced accommodation investment. You can avoid a lot of the hassle that comes with owning property, as a lettings agency can take care of this on your behalf.

It’s worth going into more detail about London’s policy on holiday lets and serviced accommodation, as it’s becoming the basis for proposed regulations in other cities.

London only allows landlords to use their properties as holiday lets for 90 days a year.

In 2017, Airbnb introduced this policy for all ‘entire home’ listings in the Greater London area. This was done to comply with the Deregulation Act 2015, which allowed homeowners to use their home for holiday lets for up to 90 days a year without needing planning permission.
After landlords have used up their 90 days, Airbnb will automatically close bookings for the property until the following calendar year.

Other areas of the UK are likely to introduce similar policies in the future, including Liverpool. Former Levelling Up Secretary Michael Gove previously announced plans that will require landlords to obtain planning permission for holiday lets. However, it is up to local councils to decide whether to use these planning controls.

It is currently undecided whether a similar rule to London will be implemented with this new policy, as homeowners may be allowed to let out the home they live in for 30, 60, or 90 days, but this is still under debate.

Cities around the UK may already have different local regulations in place. Manchester stands out in this case, levying a ‘tourist tax’ on anyone staying a night in the city. Whilst this is only £1 per night, it is expected to generate up to £3 million per year. Other cities like Edinburgh are considering a similar tax.

Check the local regulations and laws on short-term lets and tourism in your area, and if these are likely to change in the future.

What landlords should take away from this is that you should aim to get planning permission sooner rather than later if you want to be able to invest in serviced accommodation, as this will mean you can let out to guests all year round rather than for a shorter time.

The audience for serviced accommodation is wide and varied, giving landlords of such properties a broad target market.

Many people travelling for work-related purposes will have serviced accommodation booked for them by their employer, especially if they are travelling in a group. The rates are more affordable than a hotel, and they offer a private area for discussing work-related matters and relaxing in the evening.

Tourists and groups, such as stag and hen dos, are also common guests of serviced accommodation, taking advantage of lower rates compared to hotels. However, many developments may be more selective on who their apartments can be let out to and groups like these may not be permitted in case they cause disruption for other tenants.

You may also find guests looking for a longer-term stay who use serviced accommodation whilst they are finding a long-term rental property, or while their main residence is not fit for living in.

In short, you can find all kinds of people looking for serviced accommodation in the UK, so landlords of serviced apartments benefit from being able to target a broad audience with their property to ensure a consistent cash flow.

Serviced accommodations are gaining popularity among various guest classes for several reasons:

• More space compared to a hotel room.
• Better value for money, as you are getting more room for similar prices to a hotel, with many even being cheaper.
• Extra privacy.
• Proximity to city centres, with good transport links. Many also have parking available.

Many different kinds of people are seeking short-term accommodation that meets these criteria, which is why serviced apartments are on the rise as a lucrative investment strategy.

The amount of money you make from a serviced apartment in the UK depends on how consistently you can keep it booked with guests.

There are some differences in income between serviced accommodation and buy-to-let properties:

Unlike buy-to-let properties, there can be longer void periods with serviced apartments, where you are without a consistent cash flow of income. With traditional buy-to-let, you will typically find that most tenancies run for between six and twelve months. This means landlords of buy-to-let properties can expect the same amount of money each month, whereas this may fluctuate for serviced accommodation.

If you can consistently house guests, then the potential for returns can be massive. However, if there are quiet periods or long waits between guests, then you will find your returns fluctuating from month to month.

Add to this the increased costs of a serviced apartment, including furnishings, housekeeping, and services such as WiFi and utilities. You’ll need the extra earnings to keep the lights on when you don’t have guests staying in your property.

It’s worth keeping in mind that higher-quality properties in prime locations can generate higher nightly income; therefore, it’s essential to consider both location and property type if this is an investment you’re considering.

To put it simply, there is a greater risk-reward balance with serviced accommodation, as you can earn significantly higher returns if you are investing for a monthly income, yet face the risk of potential long periods of waiting if you don’t invest in a high-demand location.

Investing in serviced accommodation is similar to investing in buy-to-let property, and many of the things you look for will be similar.

Ideally, find a location that attracts a large number of guests. For serviced accommodation, this can be a lot more varied than with traditional buy-to-let properties. An isolated country cabin can be just as appealing to many as an inner-city apartment. Often, however, city centre apartments can generate higher yields due to affordable purchase prices paired with high average short-term rental costs.

Different types of serviced accommodation will appeal to different kinds of guests, so ensure you understand what your audience is looking for when choosing what kind of serviced accommodation investment you want.

The next step is to purchase the property you have chosen. This operates very similarly to buying traditional buy-to-let property, and you will likely need to take into account extra stamp duty rates for a second property.

Once you have bought the property, there are several important issues you need to resolve before it is fit to house guests:

• The furnishings of the property, such as bedding, cooking appliances, and living areas.
• What services and amenities will be offered? Will there be WiFi, laundry, or more luxurious services, such as a gym, swimming pool, or concierge?
• Who will handle the housekeeping and cleaning between guests? If you hire someone, how much will you need to pay them?
• Who will manage the property? Will you do it yourself or hire someone to do the hard work for you?
• How will the guests check in? Will there be a key drop-off, or will someone meet them at the property?
• How will you advertise your property? Will it be on booking.com or Airbnb?

If you choose to advertise online, you may find guests booking your property at very short notice, sometimes a few hours before they are due to check in! You need to be organised and have all these issues addressed before you open your property to guests.

Once this is all prepared and organised, you can begin advertising to guests and collecting income from your serviced accommodation investment!

Before making a serviced accommodation investment, ensure you are looking in the right place. There are several ways you could go about this, and we’ll discuss several popular methods that serviced accommodation investors use now:

1. Invest with a Property Investment Company

Property investment companies work with developers to sell buy-to-let properties directly to investors, thereby cutting out go-betweens such as estate agents.

From time to time, you will find property investment companies selling properties specifically built to be serviced accommodation, and these are some of the best investments you can make.

Not only will you be buying property designed with the specific purpose of being used as serviced accommodation, meaning it will likely come with added amenities that will help draw guests to your investment, but because you are buying directly from the developer, the price is likely to be below market value.

Additionally, developers are building properties with the specific purpose of being used for short-term rentals. In that case, they will likely secure the correct planning permission to allow landlords to rent out their serviced accommodation throughout the year.

New-build properties are also often constructed in areas of heavy regeneration and in major cities, where many potential guests are likely to need high-quality short-term lets without wanting to pay hotel prices.

Our development, Rice Works, is such an investment. With stunning facilities that include a hotel-quality spa and a fully equipped gym, Rice Works also features the correct planning permission to allow landlords to operate their units in the development as holiday lets throughout the year.

2. Convert a Residential Property

One of the most common methods of investing in serviced accommodation is to buy a residential property or use one they already own and convert it for use as a holiday let, either all year round or during busy periods, such as summer.

This gives you a much wider net to cast when looking for a property you can use as serviced accommodation, as you can find residential property for sale and filter out those which don’t fit the criteria you have set.

Guests often rent these kinds of serviced apartments and accommodations because of the homely feel they bring to their stay, and because many converted residential properties have on-site or nearby parking, allowing for easy travel.

However, this is a costly method of investing in serviced accommodation, as not only will you have to purchase your chosen property, but also pay for any furnishings, conversions, or renovations that you want to include or make.

You may also need to obtain planning permission from your local council for holiday lets. With the aforementioned new regulations coming into effect soon, you may only be able to rent out your serviced accommodation for a short period each year.

This does add a degree of flexibility, though, as when you are unable to use your serviced accommodation as a holiday or short-term let, you can rent it out to regular tenants with a medium or long-term lease and charge a higher level of rent, thanks to the furnishings you provide.

3. Use Your Own Home

The third option for those who want to begin investing in serviced accommodation property is to use their own home for short-term lets, either by renting out a spare room or the entire property whilst they are away.

This is far and away the cheapest method of investing in serviced accommodation, as it only requires ensuring that your living space is tidy, clean, and presentable for when the guest arrives. You’ll already have amenities they would expect, like WiFi and a cooking area, without needing to pay any extra.

Suppose you are going away on holiday or travelling due to work for an extended period. In that case, you can use your home as serviced accommodation to earn passive income while you are away. Rather than seeing bills rack up or leaving an empty house, you’ll be able to make money whilst enjoying your holiday. However, you won’t be able to do this in the long term.

There are, however, some downsides to this method. Firstly, you’ll be letting strangers into your own home on a regular basis. You and your family will need to be comfortable with this, and you should do a background check to be safe.

Suppose you rent out your home to someone while you are away and return to find it damaged or in disrepair, you’ll have to deal with the hassle and discomfort of having it repaired. This may deter you from using your home as serviced accommodation in the future.

Secondly, you won’t be able to collect rental income from serviced accommodation all year round, unlike with the other methods of investing we have discussed. If you choose to rent out your entire home rather than just a room, you will naturally only be able to do this when you are away.

What Is Meant by Serviced Accommodation?

In the simplest terms, serviced accommodation means the landlord provides ‘services’ to the guest in addition to just a place to live. Commonly, these amenities include housekeeping and WiFi, but they vary from property to property.

What is an Example of Serviced Accommodation?

A good example of serviced accommodation is a fully furnished apartment used for short-term lets, which has everything a tenant might need to live in without having to bring items like furniture or kitchen utensils with them.

It would likely offer amenities such as free WiFi and housekeeping services. It may include additional facilities, such as car parking or access to an on-site gym, depending on how the landlord sets it up.

What is the Difference Between Serviced Accommodation and Holiday Lets?

Practically, there is little to no difference between serviced accommodation and holiday lets. Both types of buy-to-let offer guests the same experience, providing a fully furnished place to stay that falls somewhere between a hotel and a residential property.

However, holiday lets are more likely to only be available or busy at certain times of the year, such as summer holidays or major tourist events in the area. Serviced accommodations, on the other hand, are more likely to be available and in high demand all year round due to the wider array of potential guests.

Is Airbnb Serviced Accommodation?

Airbnb is a hosting platform allowing landlords to advertise their serviced accommodations. If you’re browsing properties on Airbnb, it’s almost certain that you’re looking for serviced accommodation.

It’s undoubtedly the largest portal for UK serviced accommodation, with a current total of over 6 million active listings worldwide. Many landlords also advertise their properties on other sites, such as Booking.com, to help increase their reach.

Is Serviced Accommodation Illegal?

Suppose you bought your property using a buy-to-let or residential mortgage. In that case, it will be classed as mortgage fraud if you use it as serviced accommodation, as it is not what the property was intended for when you borrowed the mortgage.

However, you may be able to contact your mortgage provider and see if they will give you consent to let, but this is unlikely.

Mortgage fraud has serious consequences, so if you want to invest in serviced accommodation, ensure your mortgage provider will allow you to do so before you go about it.

What is the average ROI for serviced accommodation?

As always, results will vary. Successful serviced accommodation investment properties often see 8–15% NET yield annually. High occupancy and dynamic pricing will also increase your potential for strong ROI.

Is Serviced accommodation UK better than buy-to-let in 2025?

Serviced accommodation can outperform buy-to-let in peak periods due to higher nightly rates. However, it comes with added responsibilities and operational costs to think about.

Do I need a license to operate one?

You might do in some areas, yes. London limits short-term lets to 90 days per year. Local councils may require permits.

You should always check local planning laws and council guidance before investing in serviced accommodation.

Can I get a mortgage for serviced accommodation?

Yes, though not all lenders support it. You’ll likely need a specialist loan tailored to serviced accommodation in the UK, rather than a standard buy-to-let mortgage.

Is it suitable for first-time investors?

Yes, especially with a hands-off model. New investors can succeed by working with a reliable investment company and choosing high-demand locations with proven serviced accommodation examples.