Unlike a single-let buy-to-let, with serviced accommodation, you essentially let a property out on a short-term basis. You let your property out to what we\u2019ll call guests rather than tenants, because you\u2019re letting the property out usually, by the night or at least on a short period of time.\u00a0<\/p>\n\n\n\n
So, rather than we would say a buy-to-let, where you have a 6-months tenancy or a one-year tenancy, you may be letting out your serviced accommodation literally for one night, or it could be for a weekend, or you can actually have long-term short-term lettings. I know of many people who\u2019re involved in the serviced accommodation sector, who get very excited, for example, when a contractor comes along, they want to take the property for 6 months. You can do that as well. <\/p>\n\n\n\n
So, all things are possible. The thing is, it\u2019s very flexible. It\u2019s not as rigid as a buy-to-let, where you have to have a 6-month AST, assured shorthold tenancy as a minimum. <\/p>\n\n\n\n
Quite often, the type of property that\u2019s used for serviced accommodation is the same sort of property that you would use for a buy-to-let or a single-let. However, when it\u2019s used as a serviced accommodation, the type of property although it\u2019s the same, it\u2019s going to generate much higher returns. Why? Because the type of fees, which we could call rent, which you can command for per night or per short stay, will be proportionately far greater than the amount you can charge for a 6-month or a year tenancy.<\/p>\n\n\n\n
So, for example, it may be that, if your serviced accommodation unit is a typical sort of standard buy-to-let, you may get, \u00a3500 a month for it, depending upon where it is in the country. But you may be able to charge something like, \u00a380 per night for it, if you\u2019re using it for serviced accommodation. Now, of course, you\u2019re not going to necessarily have it occupied every night. But you only need a fairly decent occupancy rate for those \u00a380 per night to be more than the \u00a3500 per month, that you get on assured shorthold tenancy.<\/p>\n\n\n\n
So, it all sounds pretty good, but what are the downsides? <\/strong><\/p>\n\n\n\n But it could be that in your area, buy-to-lets are furnished. Regardless of that, you are going to furnish your serviced accommodation. You\u2019re going to need to provide all the furniture. You might want to put in a nice TV. You are going to be providing bedding. You\u2019re going to be providing towels, tea, coffee, milk and biscuits for your guests for when they arrive, it\u2019s a bit like a nice hotel. Just think of it, really as being a hotel, and you\u2019re providing hotel rooms, because that\u2019s the closest equivalent. <\/p>\n\n\n\n Like any hotel, you\u2019ll need to clean the rooms and change the linens every time your guests leave<\/strong>. Or, if they are for there for longer periods, you\u2019ll need to have a cleaner in, and change the linen on a regular basis while your long-term short-term guests are there. So, you\u2019re going to need to think about:<\/p>\n\n\n\n All of these things need to be thought about particularly, if you\u2019re taking bookings over, say, booking.com or Airbnb, something like that, where somebody could literally book just minutes before they turn up. If somebody books your serviced accommodation at 10 o\u2019clock at night, how they\u2019re going to get in? All these things need to be thought about.<\/p>\n\n\n\n So, with all of these in mind, you\u2019d probably going to\u00a0need a team in place to support you<\/strong>. Unless of course, you do it yourself, in which case, this will be highly management intensive for you. You\u2019re really creating yourself another job, and not an investment. But you know the returns are so good, you may say, well, Peter, I don\u2019t mind that, because it\u2019s just a matter of going out a couple of times a week to let somebody in. I don\u2019t mind doing that, because the amount of income that those properties are generating, makes it well worth my while.<\/p>\n\n\n\n So, there\u2019s more than one way of doing this. There are several models within this strategy, that you could adopt. For example, you could choose to have a model, where you effectively have, say, a single house that you let as a single entity. So, you let out the whole property once. Maybe, it\u2019ll be let to a family, and you could let the whole property. Or, you could have a single house, which you could almost operate like, a mini HMO, where perhaps you let each room separately. Or, perhaps you could have a house, which you turn into apartments. There are different ways of doing it. <\/p>\n\n\n\n But you want to be very clear as to how you\u2019re going to be doing it, because you\u2019re probably going to be looking for a different type of clientele<\/strong>. If you have just single rooms, which you\u2019re letting out, it is going to be more like a hotel. If you\u2019re letting out a house, which has got multiple bedrooms, but you\u2019re letting it to, say, one family, then you\u2019re looking for a different type of a guest.<\/p>\n\n\n\n I know as I said earlier, a lot of operators in serviced accommodation market, for example, get very excited about contractors, where you could have contractors sharing the house. They didn\u2019t really matter though, if they just want to have single rooms, and they have a room each. It\u2019s up to you really to decide how you want to provide it, and how the property is going to work best for you. <\/p>\n\n\n\n One thing, which you do need to be aware of, if you\u2019re going to get into serviced accommodation, is that you\u2019re going to need<\/strong> planning<\/strong>. Because one of the Planning Acts for this type of property, would not be considered to be a normal residential property. It\u2019s really a holiday let. For planning purposes, that\u2019s pretty much how they\u2019re going to treat it. <\/p>\n\n\n\n So, you\u2019re going to need planning consent<\/strong>. That\u2019s going to impact and affect other things, such as how you finance the property<\/a>. So, when it comes to finance in serviced accommodation, the type of finance that you need, is going to be different from the type of finance should you use for a buy-to-let. You\u2019re going to need a commercial mortgage. And please let me just implore you here, please don\u2019t go off, and buy a property using a buy-to-let mortgage, but with the intention of using it as serviced accommodation. Don\u2019t then ignore the planners. We\u2019re going to think about insurance in a moment. But make sure you\u2019ve got the right insurance. Please do it properly, because if something goes wrong, you\u2019re going to be in big trouble. <\/p>\n\n\n\n If you go off and buy yourself a property using a buy-to-let mortgage, intending to use it for serviced accommodation, and your mortgage lender finds out, they\u2019re rightly going to be quite upset with you. They\u2019re probably going to ask for their money back, which could be rather awkward and slightly embarrassing.<\/p>\n\n\n\n