Join CityClub Today to Receive:

  • Priority access to exclusive off market investments
  • Below market value pricing
  • Out of hours investor support chat
  • Allocated solicitor for hands free conveyancing

    What is serviced accommodation?

    Serviced accommodation is typically fully furnished and is a popular investment choice among property investors. Albeit this type of property is available for both short and long-term lets, it is much more popular as a short-term let. The facilities on offer are similar to a hotel, but with more flexibility. The apartments mainly appeal to travellers looking for temporary accommodation. Whether they need a place to stay during a business visit or a vacation, a serviced apartment will most likely be of interest.

    These apartments are appealing to travellers looking for a place to stay because the rooms are often much larger than hotels. On average, managed apartments offer 30% more space than a hotel room at a similar price.

    What can you expect?

    Managed accommodation is usually let out for a brief period or on a nightly basis. However, traditional buy-to-let properties are often let out to a tenant on a six-month tenancy. Nearly all buy-to-let properties have a six-month assured shorthold tenancy (AST) in place as a minimum. Although the property type may be the same, a serviced model will generate higher returns because of its appeal. Property owners can charge a reasonably higher rate for a shorter stay or per night in comparison to the amount they can charge for a 6-month tenancy.

    A long-term lease on this type of property means you can lease for a longer time. Contrary to this, a short-term lease is when the owner can use the property at any time. For example, during a holiday, the owner of the property may choose to live there. However, during other times the accommodation can be let out.

    A serviced accommodation typically generates higher returns. For instance, depending on the location, you may rent your property for £500 a month. Now, if you are taking advantage of the service model strategy, you may charge per night. Again, depending on the location and demand in the area, you may charge £75 a night. Understandably, the property will not house a tenant every single night. Nonetheless, if you rent your property for eight nights a month on average – you will have already made a profit. Therefore, with a steady and consistent occupancy rate, you can expect to achieve healthy returns. Besides, this is not hard to obtain in an area encircled by tourist attractions and local amenities.

    Could this be your next investment strategy?

    Serviced apartments offer more value for money in comparison to a hotel. Therefore, the longer a tenant stays, the better the value. You may consider the serviced apartment model as part of your purchase strategy.

    Traditionally, the model of renting a property was:

    • Property promotion: Promoting your property until a suitable tenant is found
    • Tenant Review: Finding suitable tenants by obtaining references
    • Tenancy Agreement: Prepare an assured shorthold tenancy (AST)
    • Renewals: Negotiate a tenancy renewal

    Property investors across the globe adopt this familiar and stable strategy. However, with the introduction of the serviced accommodation model, the market seems to have shaken up over the years. Platforms such as AirBnB allow homeowners to promote their accommodation on a short-term basis. This model works well for all those participating. Firstly, it benefits property owners, maximising their potential returns. Secondly, this model helps tenants secure a short-term let in a fantastic location with more flexibility than a hotel

    How do you implement the most profitable serviced accommodation model?

    To implement the most profitable serviced accommodation strategy your apartment must be in an ideal location. It is paramount to consider other facilities available in the vicinity, which may attract tourists or workers. Demand in the area should be high to maximise your returns.

    Investors can expect to achieve a steady flow of income in a much more efficient way. Great promotion of your property coupled with excellent customer reviews will also draw an influx of tenants to the property, time after time.

    CityRise Verdict

    Property investment has opened its doors to many avenues. Property investors now have more opportunities to generate a higher ROI than ever before. Serviced accommodations are moving up on the property agenda, with many investors adopting this unique investment strategy.

    However, serviced apartments only thrive in locations with high rental demand. Therefore, it is vital to consider the area when choosing the right property. Properties near zones with elevated levels of tourism or close to places of work will generate higher returns. This is in comparison to property far from local amenities.

    Converting homes into fully furnished apartments requires a lot of time and effort. However, with the range of CityRise furniture packs on offer, you can quickly equip your apartment with high-quality furniture. At CityRise, we do all of the hard work for you. Sourcing the most durable and stylish products at the best prices. Our packages save you time and are terrific value for money.

    In addition, the government is slowly lifting the coronavirus restrictions. Businesses in the city centre are welcoming staff back to the offices and resuming face-to-face meetings. Consequently, this is driving demand for serviced accommodation around the city centre as professionals continue with business visits. But, the tourism industry is not surging just yet, with many countries still on the red list, travel has not resumed to pre-pandemic levels. However, we expect this to ease steadily.

    Will you implement this serviced model into your property investment strategy? Why not reach out to one of our experienced Investment Consultants to discuss the options we have available.

    Related Articles

    • Why Invest in a Young City?

      Why Invest in a Young City?

      A young city is a city that is considered new and is not as recognised as major cities like Manchester and Leeds. With large potential for...

      Learn more
    • The Average Buy-to-Let Mortgage Rate Continues to Fall

      The Average Buy-to-Let Mortgage Rate Continues to Fall

      As an investor, it is important to keep up to date with changing rates and offers to ensure the best deal is secured. Currently, the BTL mortgage...

      Learn more
    • Top Reasons to Invest in Property

      Top Reasons to Invest in Property

      One of the main ways to accumulate money is by investing. Property is one of the most popular investment choices for many reasons. Due to the...

      Learn more
    • Reasons to Invest in Huddersfield

      Reasons to Invest in Huddersfield

      Huddersfield is a rising town for buy-to-let investment, with the average property prices being more affordable and many selling points to tenants....

      Learn more

    Explore our Investment Guides

    Take a look
    Explore our Investment Guides
    Chat to us