Securing a Mortgage for Serviced Accommodation in the UK

If you’re considering buying a property for serviced accommodation or converting an existing buy-to-let, there are a few hoops to jump through.

Chief amongst these is securing finance for the property. While you may be used to securing mortgages for BTL properties, the process for serviced accommodation can be quite different.

Therefore, we’ve looked at a few common questions when it comes to financing serviced accommodation.

Can You Use a Buy-to-Let Mortgage?


If you already have a portfolio of buy-to-let properties, you may be hoping to use one of these as serviced accommodation without changing its mortgage.

While every lender will have its own terms and conditions, buy-to-let mortgages almost never allow the kind of short-term lets offered by serviced accommodation. Instead, it’s likely that your mortgage was provided on the basis that you rent the property on assured shorthold tenancies (ASTs) which start at six months.

You can give them a call to check, but you should be prepared to find new finance.

If you do offer serviced accommodation on a buy-to-let mortgage and your lender finds out, you may find they demand all the money back. All in all, it’s just not worth the risk.

Service Accommodation Guide

What Finance Can You Use?


In order to appreciate what finance you can use for serviced accommodation, you first have to understand exactly what it is. While it may seem the same as a typical rental (just with shorter leases), serviced accommodation is in fact much closer to commercial property.

This is because it comes with a number of considerations that traditional BTLs don’t. The short-term nature of the lets means that your property has to attract a lot of guests. This is determined by the quality of your marketing, your ability to gather great reviews and your understanding of the local marketplace.

Sound like running a business? That’s because it is.

The result is that you need a mortgage designed for serviced accommodation or, at the very least, one that allows it. While some high street banks do offer mortgages where serviced accommodation is permissible, these are few and far between.

We’re going to look at the options you have but bear in mind that the best thing you can do is speak to a specialist broker.

Commercial Mortgages

For many years, serviced accommodation has relied on commercial mortgages for finance. This makes sense, as serviced accommodation should be viewed as a business, especially if it is to benefit from the tax advantages that come with being a furnished holiday let.

However, what constitutes a commercial property is much broader than what constitutes a buy-to-let, which means commercial mortgages have to be much more bespoke (one of the reasons you’ll find fewer options on the high street).

The main point of difference between a BTL and commercial mortgage is that the latter considers the returns from the business as a whole, not just the property.

Therefore, the information lenders use to decide whether to provide you with a mortgage differs greatly. We’ll look at this later in this blog, but before we do…

Holiday Let Mortgages

Thanks to the rapid increase in serviced accommodation investment, some lenders are now offering dedicated mortgages for holiday lets.

There are only a handful of lenders currently offering these and obviously, the terms differ from lender to lender, but there are some common themes:

  • They’ll typically only offer up to 75% LTV
  • You’ll likely have to own your own home
  • You may have to have a minimum yearly income that is not derived from rental properties.
  • Limits may be placed on the number of days you can use the property as a residence

As stated, the terms of these holiday let mortgages differ, so ensure you seek the advice of a specialist broker if you’re considering one.

What Do Lenders Consider?


As we mentioned, commercial mortgage lenders look at more than the potential rental value of the property. Instead, they’ll look at the viability of the business that the property creates.

For this reason, they’ll likely look at the following factors:

  • Trading Experience: How much experience do you have in successfully managing a serviced property? You’ll need to show that you understand the market and how to ensure the property is in demand.
  • Affordability: Commercial mortgage lenders often require proof that the property can produce the income required to cover the mortgage. In many cases, you may need to provide around three years of accounts or tax returns to do so. You may also need to provide projections of future earning potential.
  • Location: The lender will evaluate the market to determine whether there is enough demand for serviced accommodation to make it viable. For obvious reasons, this can make getting finance for a property outside a business or tourist hub difficult.

Above are the main considerations lenders will take into account, but each one will have its own unique qualifying criteria.

Of course, if you’re completely new to serviced accommodation, you may be worried about being able to prove your experience or the affordability of the property you want to use.

Clearly, though, everyone has to start somewhere. It’s not impossible to find financing without experience and, in fact, some holiday let mortgage lenders welcome first-time landlords. It is worth seeking the help of a specialist broker, though.

Does the Platform You Use Matter?

Another thing you should consider when sourcing finance for serviced accommodation is whether you have a platform in mind for hosting the property.

A few years ago it wouldn’t have mattered, but the popularity of hosting websites like Airbnb has moved some lenders to offer mortgages tailored to properties that use these platforms.

Therefore, if you’re sure that you’re going to let the property via a platform like Airbnb, you may have additional finance options.


Financing serviced accommodation is not impossible, even if you’re new to this type of property investment.

Thanks to its growing popularity, more and more lenders are offering fiance designed specially for serviced accommodation, though even without this, commercial mortgages are always an option.

Unlike a buy-to-let property, though, serviced accommodation requires a far more tailored solution. For that reason, it’s worth seeking the services of a specialist broker.

However, mortgages are just one consideration when setting up a property for serviced accommodation. You’ll also need to think about leasehold restrictions, planning permission and insurance.

To learn more about these and other elements, download our free Guide to Investing in Serviced Accommodation.

Service Accommodation Guide