What Makes Serviced Accommodation a Smart Investment in 2024?

As we delve into the world of property investment, a relatively new but increasingly popular avenue is serviced accommodation. Unlike traditional buy-to-let or holiday lets, serviced accommodation offers a unique blend of benefits and challenges. In this blog, we will explore what serviced accommodation is, discuss recent regulations, identify key tenant sectors to target, and highlight the best locations for investment.

What is Serviced Accommodation?

Serviced accommodation, sometimes referred to as short-term lets, falls between the realms of holiday lets and traditional buy-to-let properties. These properties are fully furnished and available for short-term stays, often providing hotel-like amenities such as housekeeping, linen services, and sometimes even concierge services. This makes them ideal for business travellers, tourists, and those in need of temporary housing due to relocations or renovations.

Unlike typical holiday lets, serviced accommodations can attract a broader spectrum of tenants, including corporate clients, contractors, and even local residents seeking temporary housing solutions.

We find this a lot with our Harrogate based properties which are not seasonally sought after, but in fact well booked up all year through! 

What are the recent regulations for serviced accommodation?

The regulatory landscape for serviced accommodation is evolving. The world of Booking.com and AirBnB has moved far quicker than the government or regulatory bodies. 

One of the most significant changes in recent years is the introduction of stricter planning and licensing requirements. In many areas, properties intended for short-term rentals now require specific permissions, and in some cases, this can mean applying for a change of use from residential to commercial.

Furthermore, local councils have started implementing additional measures to control the proliferation of short-term rentals to ensure they do not negatively impact local housing markets. This includes restrictions on the number of days a property can be let out on a short-term basis without requiring full planning consent.

For investors, staying abreast of these changes is crucial. Compliance with local laws not only avoids hefty fines but also ensures that the property can be marketed legally, avoiding potential disputes or void periods.

Fire regulations and building regulations are also catching up fast with recent legislation rules coming into play. Gone are the days when you just place your existing property on the market.  It is now treated as a commercial enterprise and a lot of the safety regulations are now attributed to SA.  Fire risk assessments, emergency lighting, thumb turn locks are all now needed.

Who are the target sectors for serviced accommodation?

The success of serviced accommodation hinges on understanding and targeting the right tenant sectors. Here are some of the most promising:

1. Corporate Clients: 

Business travellers often seek out serviced accommodation for its flexibility and home-like amenities, making it an attractive alternative to hotels.

2. Contractors and Project Workers: 

Individuals working on short-term projects in different locations prefer serviced accommodations for the comfort and convenience they offer over long-term hotel stays.

3. Tourists: 

While not the primary target, tourists do constitute a significant portion of the clientele, especially in popular tourist destinations.

4. Relocation Clients: 

Families and individuals relocating temporarily due to work or while their permanent residence is being prepared are prime targets.

Where is the best location to buy serviced accommodation?

Investing in serviced accommodation requires a strategic approach to location. Some of the top factors to consider include:

1. Proximity to Business Hubs:

Cities with thriving business districts such as London, Manchester, and Birmingham are ideal due to the steady influx of corporate clients. They need to be local to where the guest needs to get to so centrally located is usually the best.

2. Tourist Attractions: 

Locations near major tourist attractions or in popular holiday destinations can help attract vacationers. 

3. Transport Links: 

Properties close to major transport links, including airports, train stations, and motorways, are highly desirable as they offer convenience to both business and leisure travellers.

4. Upcoming Development Areas: 

Areas undergoing significant development or regeneration often present good investment opportunities due to expected future growth and demand.

Should I invest in serviced accommodation?

Serviced accommodation represents a lucrative investment opportunity for those willing to navigate its complexities. By understanding what it entails, staying informed about regulations, targeting the right tenant sectors, and choosing strategic locations, investors can tap into this growing market effectively.

This strategy is higher yielding and can produce more income than a traditional BTL.  One of the large benefits of SA is that the property can be small and therefore a lower purchase price than properties that are needed for strategies like conversions to HMO’s.

For those looking to expand their property portfolio with serviced accommodations, it’s essential to conduct thorough research and possibly consult with property experts to maximise returns while mitigating risks. There are a number of moving parts and all need to be aligned.

Stay connected with us for more insights and updates on property investment strategies – follow us on LinkedIn, Instagram and Facebook. For further advice on investing in serviced accommodation or to explore current opportunities with us, feel free to contact us at nick@saltboxliving.co.uk