Serviced accommodation is a term you might have come across if you’re looking to rent or invest in property, and it’s gaining popularity for good reason. But what exactly is it? Essentially, serviced accommodation refers to fully furnished rental properties that come with hotel-like amenities and services. These properties can range from apartments to houses and are available for short-term stays or longer periods, making them versatile options for various types of guests, including business travellers, holidaymakers, or even people looking for temporary housing.

For example, imagine you’re on a work trip in London for a couple of weeks. Instead of staying in a hotel, you rent a serviced apartment that has a fully equipped kitchen, Wi-Fi, and maybe even a concierge service. You get all the comforts of home with the convenience of a hotel, but often at a better price and with more flexibility. Sounds appealing, right?

But it’s not just individuals who are drawn to serviced accommodation. Investors are increasingly seeing the benefits, too. In fact, serviced accommodation has become an attractive option for property investors in the UK looking to diversify their portfolios and achieve higher yields. Unlike traditional buy-to-let properties, which are often rented on a long-term basis, serviced accommodation allows investors to charge premium nightly rates, making it potentially more profitable.

How Does Serviced Accommodation Work?

Serviced accommodation operates similarly to a hotel but with the feel of home. When you rent a serviced apartment or house, you’re not just getting a place to sleep; you’re getting a fully furnished living space. This usually includes a kitchen, living area, bedroom(s), and a bathroom. Some even come with laundry facilities, making it ideal for longer stays.

Most serviced accommodation comes with housekeeping services, so you won’t need to worry about cleaning up every day. Utilities such as water, electricity, and internet are typically included in the cost of the rental. This makes it convenient because you don’t have to manage multiple bills—everything is rolled into one.

Many serviced accommodations also offer additional services such as 24-hour concierge, gym facilities, and sometimes even access to meeting rooms. These properties are designed to offer a “home away from home” experience, making them especially popular with business travellers who need a comfortable space to work and relax during their stay.

But here’s where it gets interesting for property investors. Instead of renting out a property for six months to a year as with traditional buy-to-let, serviced accommodation is usually rented out on a short-term basis. This allows investors to charge higher rates, especially during peak seasons or events, such as major conferences or festivals. Essentially, you’re offering a premium service, and people are willing to pay for it.

Key Benefits of Serviced Accommodation

So why are people choosing serviced accommodation over traditional rental properties or hotels? Whether you’re a potential guest or an investor considering jumping into this market, there are numerous benefits to be aware of.

Flexibility and Convenience for Guests

One of the biggest perks of serviced accommodation is the flexibility it offers. Unlike a hotel, which may feel impersonal and confined, serviced accommodation provides a more spacious and comfortable environment. You have the freedom to cook your own meals, do your laundry, and generally live as you would in your own home. For families or groups of friends travelling together, this can be a game-changer, as serviced accommodation often provides multiple bedrooms and a communal living space.

Cost-Effectiveness

While serviced accommodation can sometimes seem more expensive per night than a standard hotel, it often works out cheaper in the long run. This is especially true if you’re staying for an extended period. Hotels can get pricey, especially if you factor in meals, laundry services, and other amenities that come standard in a serviced apartment. Plus, if you’re travelling with a group, the ability to share a space rather than booking multiple hotel rooms can save a significant amount of money.

Higher Yields for Investors

For property investors, serviced accommodation offers the potential for higher yields compared to traditional buy-to-let properties. Because you can rent out the property on a nightly or weekly basis, the income generated can be significantly higher than a long-term rental. Additionally, you have the flexibility to adjust pricing based on demand, charging higher rates during peak seasons or local events.

Lower Risk of Problematic Tenants

One advantage that investors often overlook is the reduced risk of problem tenants. In traditional buy-to-let properties, landlords may face issues with tenants who don’t pay rent on time or cause damage to the property. With serviced accommodation, guests are typically staying for short periods, and payment is usually taken upfront, reducing the risk of financial disputes. Furthermore, the frequent turnover of guests means the property is regularly inspected and maintained, ensuring it stays in good condition.

Tax Benefits

There are also potential tax benefits associated with serviced accommodation. In the UK, serviced accommodation can qualify as a Furnished Holiday Let (FHL), which comes with tax advantages such as capital allowances on furniture, fixtures, and even the cost of refurbishments. This can make a significant difference when it comes to your overall profitability as a property investor.

Differences Between Serviced Accommodation and Hotels

You might be wondering, “What’s the difference between staying in a hotel and serviced accommodation?” While both options provide a place to stay, they cater to different needs and preferences.

More Space and Privacy

One of the main differences between hotels and serviced accommodation is the amount of space you get. Hotels typically offer just a bedroom and bathroom, while serviced accommodation provides an entire living space, including a kitchen and living room. This makes it much more suitable for extended stays or for those travelling with family or friends.

A More Personalised Experience

Serviced accommodation also tends to offer a more personalised experience. While hotels are great for short stays, they can feel impersonal and lack the homey touches that a serviced apartment provides. With serviced accommodation, guests have the freedom to customise their experience by cooking their own meals, relaxing in a living room, and generally enjoying a more relaxed environment.

Cost Savings on Longer Stays

For longer stays, serviced accommodation is often more cost-effective than staying in a hotel. Hotels charge for additional services like laundry and meals, while in a serviced apartment, you can do these things yourself. Over time, these savings can add up, making serviced accommodation a better option for extended trips.

How to Invest in Serviced Accommodation

Now that you understand what serviced accommodation is and why it’s so popular, let’s dive into how you can invest in this growing market.

Choosing the Right Property

The first step in investing in serviced accommodation is choosing the right property. Location is key, as you’ll want to invest in an area with high demand for short-term rentals. This could be near major business districts, tourist attractions, or event venues. Popular cities for serviced accommodation in the UK include London, Manchester, Edinburgh, and Birmingham.

Understanding the Regulations

Before diving in, it’s important to understand the regulations around serviced accommodation in your area. Some local councils may have restrictions on short-term rentals, so you’ll need to make sure your property complies with these rules. Additionally, you’ll need to consider things like insurance and health and safety requirements to ensure your property is suitable for short-term guests.

Managing Your Property

Once you’ve secured your property, the next step is deciding how to manage it. You can either manage the property yourself or hire a property management company that specialises in serviced accommodation. Many investors choose the latter, as it frees up their time and ensures the property is well-maintained. Property management companies will handle everything from cleaning and maintenance to guest check-ins and pricing adjustments.

Maximising Your Returns

To maximise your returns, it’s important to stay on top of demand and pricing. Using dynamic pricing tools can help you adjust your rates based on local events, seasons, and market trends. This ensures you’re charging the right price at the right time to maximise occupancy and revenue.

Marketing is also key to the success of your investment. Listing your property on platforms like Airbnb, Booking.com, and Expedia can help you reach a wider audience. However, having your own website and building a brand around your serviced accommodation can also attract direct bookings, reducing the commission fees you pay to third-party platforms.

Why Serviced Accommodation is Worth Considering

Serviced accommodation offers a unique blend of flexibility, comfort, and cost-effectiveness for guests while providing investors with the potential for higher yields and lower risks. It’s no wonder this type of rental is gaining traction in the UK and beyond.

Whether you’re a business traveller looking for a home away from home or an investor seeking to capitalise on the growing demand for short-term rentals, serviced accommodation presents an appealing option.

In a world where people crave flexibility, comfort, and value for money, serviced accommodation stands out as the future of short-term rentals. So, what are you waiting for? If you haven’t already explored this exciting sector, now is the perfect time to dive in.