Serviced Accommodation: Your Next Investment Strategy?

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

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.