What is Serviced Accommodation?

Over the last few years, the property investment landscape has undergone a monumental shift.

Traditionally, landlords would look to invest in two-up two-down ex-council houses and cheap properties outside city centres. Nowadays, the savvy investor is looking towards serviced accommodation.

Essentially, serviced accommodation properties work in the same way hotels do, but they need to have a more homely feel to them. The idea is to have a steady stream of short-term guests who are willing to pay a little more money for the key elements of modern living combined with a touch of style.

The ideal type of property for anyone looking to go down this route is a one or two-bedroom apartment. At most, the apartment will only be used by two people at any one time, so trying to turn a large house into serviced accommodation will usually be timely, costly and unnecessary.

Investors who have already purchased serviced properties have seen great returns on their investments when compared to other buy-to-let property ventures due to understanding what type of property to buy and where.

We’ve gone through what serviced accommodation is, but there’s a lot more to the idea than simply having a modern, stylish hotel room. So, read on to find out everything you need to know about serviced accommodation.

Who Rents Serviced Accommodation?

business-people-walking-along-london-street-with-london-landmarks-in-backgroundServiced accommodation properties tend to be rented out by professionals visiting towns on business and by tourists looking for a nice place to stay within a reasonable distance of the areas and landmarks they want to see.

These guests will only be staying for a few days at most, so it’s essential that serviced accommodation properties are highly appealing. This is so they can attract a consistent flow of visitors, which ultimately means a more favourable return on investment.

To be in a position where a landlord has several parties interested in their property, they need to add homely but luxurious items. This can include high-end furniture, a smart TV and cooking equipment to name just a few.

Essentially, anything that you would expect to be in a home should be included in a serviced apartment.

And due to how many people will be visiting the area for business reasons, having a workspace all set up will also add greater appeal to professionals. Thankfully this doesn’t mean creating a perfect replica office; a sizable desk and access to a wifi network will more than suffice.

But, having a serviced apartment that’s kitted out isn’t enough to attract professionals and tourists by itself. These apartments have to be in the right location, too.

Service Accommodation GuideWhere are the Best Locations?

liver-building-river-mersey-liverpoolThe key areas for serviced accommodation properties are busy city centres. This is because central city locations typically have strong business ties and receive a lot of footfall from visiting tourists, which has resulted in a steady stream of people looking for places to rent for the short-term.

In particular, we’ve found Manchester and Liverpool to be two prime locations for serviced accommodation investments in the North West. With their rich histories, vibrant social scenes, world-famous football teams and links to some of the UK’s most important businesses and industries, Manchester and Liverpool are highly lucrative places to invest. 

There’s an argument that serviced apartments can work well outside of metropolitan areas, too. Places that attract tourists — such as sea-side towns and areas close to UK landmarks — have the potential to bring in clients.

Likewise, smaller towns on the fringes of city centres can appeal to short-term renters, providing there are excellent transport links to and from your accommodation. 

While it’s still possible to make serviced accommodation investments work outside of city centres, it’s likely there will be more void periods that will cost landlords money in the long-run.

What are the Advantages of Serviced Accommodation?

apartment-bedroom-bed-mirror-couch-desk-laptopOne of the biggest advantages of investing in serviced accommodation properties is the potential for great rental yields.

A typical long-term rental property will generate between 3-4% per annum, but serviced apartments consistently reach between 6.5-9%, and can even reach as high as 12%. This means there’s the potential for property investors to earn more than double — if not triple — in rent if they choose to add serviced accommodation properties to their portfolio instead of the standard houses in the suburbs.

The other key reason investors are choosing to go down the serviced apartment route is the tax advantages.

If a property qualifies as a furnished holiday let, the income generated from it can be claimed tax-free. It is also possible to claim capital allowances on furniture and fixtures, so it’s recommended that anyone with a serviced apartment keeps hold of their receipts in preparation for making a call or sending an email to the HMRC.

Finally, owning a serviced apartment makes it easier to implement a property investment exit strategy.

Should a landlord decide to sell their property, there will be no shortage of buyers due to the great city centre location. City centre properties also benefit from having a higher capital growth rate when compared to suburban properties, so there’s the potential to make a fantastic lump sum further down the line.

Want to Know More?

Serviced accommodation can result in fantastic returns for any investor willing to take the plunge. In fact, you probably noticed how often we used the word ‘potential’ in this blog, and that’s because serviced properties are full of it.

All that’s required to really get started is an understanding of what renters are looking for in a serviced apartment, be that home comforts or a key location.

At Taylor Rhodes, we literally wrote the book on the subject. Well, we wrote the eBook on it.

So, if this blog has piqued your curiosity, and you’d like to know more about investing in serviced accommodation properties, you can do so by downloading our eBook free of charge.

Alternatively, you can always get in touch with us for a chat instead.

Service Accommodation Guide