Serviced Accommodation and Holiday Lets

This area has become a hot topic over the last few years and popular choice amongst investor looking for higher yielding properties.

Serviced accommodation & Holiday lets are, basically, simple BTL properties that are let on a short-term basis. Typically, they will be let on a nightly or weekly basis and, as there will not be a single tenant signing a tenancy agreement, you would need to secure a specialist product which won’t be available from all lenders.

If you intend to manage the property yourself it’s not for the faint hearted; you will need to cater for change overs, cleaning, laundry at the end of every stay, etc. That said, the potential returns are much higher than standard BTL properties, especially during peak holiday seasons.

Affordability is based on the rental income the property would attract and lenders will approach this in one of two ways:

• Based on the net rent the property generates (net rent is calculated by deducting all running costs from the gross rent), or
• Based on the amount of rent the property could generate if let as a standard BTL property on a 6 month AST.

Location, your experience, the type of tenant you’re hoping to attract, and the rental income will all play a key part in securing lending support.