Serviced Accommodation Objections and Myths

If you are new to serviced accommodation myths and objections are common. After all, if you are new to something it is only natural to hear and fear the worst. After all, bad news travels faster and sells more!

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Common objections and myths

Like with any other type of business, serviced accommodation is surrounded by myths created and popularised by people who knew too little. That is why this article will bust some of the most recurrent myths of SA for prospective landlords, and help their minds make a decision such as buying a property or not. These are the objections raised most often for serviced accommodation use of a property.

The 7 most common serviced accommodation myths are:

Knowledge and experience overcome most Serviced Accommodation myths

Myth 1: “I Don’t Want A Company Let”

It isn’t uncommon to think that as a short-term rental, your property will be frequently damaged. In fact, on initial conversations this is the reason we hear most often rejecting the use as a serviced accommodation property

Yet, in short term rentals reality, your property is looked after better than with a family as a tenant. Families have children and pets, and they consider your house their house during the contract, which means they are more likely to drill all walls and change the carpet. In this case, you are prone to receive a damaged property at the end of the rental.

Reality: Better upkeep than tenants

The majority of company let guests are from corporate or companies. This means that, no matter what happens during their stay, they’re backed by a company and at risk of disciplinary rules for any issues in accommodation. Any damages can be deducted from the guest giving you protection.

Besides that, guests of the company lets need to sign our own terms and conditions. If rules are broken, they can be immediately removed. In long-term rentals, if a tenant is damaging your property, you could have to wait up to 6 months to evict them from your property.

To make sure we are on top of things, we also clean the building whenever someone checks out (or at a minimum weekly on more extended stays). During the cleaning, we can ask the housekeeper to check the property and highlight issues quickly. Again, the company lets provide the landlord with more control over the frequency in which tenants are inspected, their properties professionally cleaned, and when the issues are identified and fixed.

Myth 2: “My Property Will Get Damaged”

You’ve probably heard of stories on Airbnb parties and properties getting damaged. In most of these occurrences, which are rare, the right processes were not in place. As we mentioned, a secure contract with specific rules and procedures will definitively avoid property damage, since the guests face the consequences for their actions. This serviced accommodation objection rarely is true, and if it is, it is far less frequent that on a BTL as AST. Here you’ll see why.

Reality: Processes keep your property safe

We request IDs, a security deposit for damage, and our terms and conditions for all guests. These terms and conditions express that we can immediately remove anyone from the property that breaks our specifications. We also put strict control on leisure bookings to reduce unwanted or high-risk bookings. Damages can be claimed from the guest, even for values higher than their deposit giving you protection. Lastly, for your protection, additional insurance can be taken out to protect against any unavoidable damages.

Myth 3: “I’ll Make More Money Self-Managing”

People think paying an agent is expensive. This might be true for a bad agent, but for a good one, it is worth a lot less than you pay!

Would you buy a single BTL to self manage? … then why do it on a far harder business to run!

Those just starting in the SA business often think they should save as much as possible – and they end up saving with the wrong thing. It’s like a cook who wants to serve fine food for critics (and earn good money for it) but starts with low-quality ingredients. A sure fire objection from many new in serviced accommodation.

Reality: You make more money with a good agent!

Unlike what you think, a good agent will earn you more than you’ve spent hiring them.

Self-managing is a hassle and takes your precious time. The agent, on the other hand, knows the market, and even better, how to market. They understand the rates and how to maximise profit – so that you won’t waste money on the wrong things or miss out of bookings.

Customers and companies looking for a SA are much more likely to follow the advice of an agent and maintain long-term relationships with them. If you are worried about expensive 15%+ agent fees, you should also know that agents regularly get direct bookings.

Unlike a single let, SA management is much more hassle – it isn’t property, but hospitality. You should always be available for the guests and be an expert on the subject right on. Self-managing a SA is a good option for those experienced with this type of business. If you are not, you’ll definitively make more money hiring a good agent.

You can see a serviced accommodation case study on how we helped an SA operator go from a large loss every month to profit in switching management company.

A great next steps may be looking into a finding an SA management company to help you maximise profits and reduce your own management hassle.

Myth 4: “It Is Illegal As It Is Subletting”

Tenancy agreements often contain a term on subletting, a tenant’s right if done with the landlord’s permission. But if you are subletting under an Assured Shorthold Tenancy, it will be against the terms of the contract and the Housing Act.

Reality: Serviced Accommodation isn’t subletting

With the right permissions and contracts in place, serviced accommodation isn’t subletting. This means that operating as a serviced accommodation property is not breaking the law or illegal if you use the right contractual agreements in place. This is certainly one serviced accommodation objection that if you have the agreements and structure in place you don’t need to worry about at all.

Myth 5: “I Need An HMO License”

Many landlords believe that to start a serviced accommodation business, they will need to get a House in multiple occupation license, because they will have guests from various homes staying. In the UK, this license is for facilities rented out by at least 3 people who are not all from one household (such as a family). Yes, a really often objection to serviced accommodation.

Reality: It is not a primary residence

People who think they need an HMO license often forget that the SA is not a permanent residence, and their clients are guests (not tenants).

The law itself clarifies that: according to the Use Classes Order of 1987, the C4 designation is for a shared house occupied by three to six unrelated individuals as their only residence (HMOs). SAs do not fall under this definition.

So, if the guest has a main house somewhere else, it is not classed as C4 and ultimately does not need planning. You can apply to change the use to C1; however, it is not required.

Myth 6: “The Market Is Saturated”

Yes, you’ve probably heard this a lot – it is easily one of the most common myths of serviced accommodation. This myth about the 100,000s of Airbnbs and the market flooded with BTL since they cannot operate during the lockdown. Although it is correct in some areas and with some types of property, it is a massive generalisation that you shouldn’t care about.

Reality: Many niches and areas are still underserved

After you study about the market and the business, you’ll see there are underserved niches ready to be conquered. The market is not saturated at all, and there is a lot of room for growth. We, for example, have the knowledge and direct relationships to work with businesses to provide accommodation that is in demand.

Myth 7: “A Holiday Let Won’t Work In My Area”

Granted, people may not come on holiday, have a high volume of tourism or leisure guests to the town of your property. However, that doesn’t mean than that there is not demand for properties priced and operated like holiday lets.

Reality: Self catering property is in demand

Holiday let is also known as an operated ‘self-catering accommodation’. It is even how the government (Valuation Office Agency) classify it for business rates.

So, even on holidays, these lets are in demand. Many companies prefer self-catering over hotels to reduce costs on accommodation, save on food allowance budgets and keep all of the team close together. This is where properties in all areas can have the demand for a ‘holiday let’.

Serviced Accommodation Objections Are The Enemies Of Profit

If you are a landlord who was afraid of owning a BTL property and turning it to a company let because of any of these myths: rest assured. As you’ve seen, common serviced objections are actually just myths.

Most people who fail, lack the knowledge and worry too much about aspects such as regulation and property damage. With us, knowledge is not a problem (nor maintenance). Besides tax efficiency, we provide clear terms and conditions to the guests, in a safety-net contract that anticipates prevention of the risks and increase overall profit.

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