Serviced accommodation is a real estate investment option characterised by a fully furnished property available for short and long-term let – mostly short-term. This can be the by month, by week or even by night. Many landlords do not know what the benefits to serviced accommodation (SA) are and prefer not to look into it further. After all, there are many common myths and objections to SA that really aren’t true. However, we believe that SA is probably a good investment option for you, and we will tell you why.
1. More money than a single let
The first reason why SA is a good investment is that it is profitable. Unlike with other types of properties, serviced apartments can be charged at a per night basis. A Manchester-based apartment that you’d typically charge £1,000 a month, for example, could be charged around £140 per night depending on the region.
Besides that, SA units are much more tax effective than single lets. Profits derived from furnished holiday letings, for example, are included within relevant earnings for pension purposes. Furniture and other items that you buy for the SA unit can also be claimed capital allowances, and you can receive tax relief.
Over time, you will understand that the tax relief you get from owning a SA will probably save you thousands of pounds.
2. Often lower start-up costs and less competition than an HMO
Although they are both great property investing strategies, HMO and SA have some differences. For those who are willing to start in the business, SA is the best choice.
The SA market is less established, and there is much less competition than HMO. Besides that, serviced apartments are smaller, and can be furnished with a small upfront cost.
Also, SAs do not have a lot of rules and legislation, while starting an HMO business requires licensing and following a strict set of rules. Because of the absence of SA legislation, many people think they will suffer from a lack of legal protection. However, this is a myth of SA business, like many others we discuss in this article.
While the legislation protects HMO properties, you can create a SA contract for the guests and choose how you want to be protected. The SA contract should contain terms and conditions with consequences for property damage, for example.
3. No voids and tenant rent arrears
Unlike long-term rentals, you’ll never need to worry if a SA guest pays the fees on time or not. They need to pay in advance of say, and your earnings will be only based in on occupancy, not an AST monthly agreement.
4. Works in most locations, not just holiday tourist locations
Serviced apartments are also known as self-catering accommodations. This means that SA does not work only as a holiday let, but also as a place companies go to when they prefer letting over paying for a hotel. So, if you are worried that your SA will only work in a holiday tourist location, rest assured. Most locations need this type of catering accommodation.
Benefits of your property being serviced accommodation
Serviced accommodation properties are wonderful options for those looking for a high-yield investment. They are a lot of work, of course, but we can help you every step of the way. We have a FAQ for those new in Serviced Accommodation that you can access for more information.
Serviced apartments are highly lucrative when managed by an SA company like ours since we have years of expertise in the business. If you are interested in hearing from us, give us a call and let’s discuss your needs and concerns.