Serviced accommodation, it’s what we do here at DerBnB. Similarly to renting out your property as an Airbnb, serviced accommodation is aimed at those looking for short to medium-term lets, whether it be for leisure, business or simply to get your feet on the ground in a new location, without having to enter into a proper rental agreement for 6 months or so. The serviced accommodation sector has boomed in the last few years, due to its benefits to both the landlord and the tenant, and it’s easy to see why. This blog explains everything you need to know about serviced accommodation and why it may be the perfect next step if you’re looking to earn some cash from your property.
What defines serviced accommodation?
Serviced accommodation is a fully furnished property that comes with everything you need for a comfortable stay, like utilities and cleaning services. It’s flexible, located in convenient areas, and caters to travellers, business people, and those relocating. It can be in the form of either a house or apartment, and gives you that homely feel away from your home.
Staying in a serviced accommodation has become a popular choice for many across the UK in recent years, whether you’re staying with family, colleagues or alone, it gives you the freedom to enjoy the local area whilst also having a place to stay that feels like home.
What are the benefits of serviced accommodation?
As stated, serviced accommodation has numerous benefits to both the landlord and tenant.
Staying in a serviced accommodation offers tenants enhanced flexibility and convenience compared to other rental options. Typically, the booking and access process is straightforward, akin to Airbnb, sparing tenants the need for extensive communication with landlords. This streamlined booking system ensures a swift and hassle-free reservation experience. Moreover, serviced accommodations are typically situated in areas teeming with amenities, such as shopping centres and easily accessible public transportation, enhancing convenience for travellers and those staying for business.
These accommodations provide fully furnished spaces with amenities like kitchens and housekeeping services, alleviating the need to set up utilities or purchase furniture. Ideal for slightly longer stays, they often offer more space than traditional hotels, featuring separate living areas, and the inclusion of kitchen facilities can lead to significant savings on dining expenses. Additionally, the privacy and authentic local experience they afford, coupled with the opportunity to engage with the surrounding community, make serviced accommodations an appealing option for those prioritising comfort and convenience while on the road.
There are also several benefits for landlords who let out serviced accommodation properties. Not too dissimilar to a normal rental property, serviced accommodation provides a regular income stream, as tenants have to pay for their stay upfront through a booking system and if advertised well and in a popular area, there should be no issue with finding tenants. However, the rental yields are usually much higher for short-term and medium-term lets through serviced accommodation, and there is potential to earn more per night compared to traditional long-term rentals, especially if your property is well looked after and attractive to those looking for a place to stay.
With shorter vacancy periods associated with serviced accommodation, periods without tenants are minimised. Longer-term rentals can often be searching for tenants for a while, whereas serviced accommodation properties, if marketed correctly, can have a constant stream of tenants staying in the property, further increasing return on investment. This is even more relevant if they’re situated in a popular area for businesses and industry, as often these professionals don’t want to be staying in a hotel for weeks on end and prefer a homely feel. These shorter vacancy periods also mean less wear and tear, and also allow flexible usage for the landlord themselves. They can use the property when no one is staying there or update the interior when empty, attracting more guests.
Serviced accommodations are usually managed meticulously by a property management company, ensuring that the property is well looked after, as it is in the best interest of the landlord and the property management company that the tenant enjoys a pleasant stay. This management, upkeep and range of utilities is often what sets these properties apart from hotels and other holiday-lets when it comes to comfort and convenience. To discuss serviced accommodation property management service, contact Derbnb today.
Risks associated with serviced accommodation
For tenants, staying in serviced accommodation is a fantastic choice, with very few negatives apart from the slightly increased nightly rate, and many positives compared to hotels and holiday-lets due to its homely feel and often immaculate condition.
For the landlord, however, just like any business, there are some downsides associated with running a serviced accommodation property as a business.
There are a few mortgage restrictions when purchasing serviced accommodation properties as they are viewed as commercial ventures, and there are a few specific rules to follow when lending money to buy one, we can advise on the best possible lending strategy for you if necessary. Alongside this, upkeep of serviced accommodation can incur quite a cost, especially if you wish to keep your property in top shape and make it as attractive as possible. These costs can include new furnishings, kitchen utilities and general maintenance. These costs should not outweigh the income, but they are something to be mindful of.
There are also some lease restrictions for those aiming at letting their property out as serviced accommodation, and sometimes planning permission restrictions can come to light if you’re looking at converting a property into serviced accommodation. These are rarely too much of an issue and easily solvable, but good to be wary of them. Finally, problem tenants as well as lack of bookings are always a possibility, but with proper management, all of these issues shouldn’t be prominent.
How to start a serviced accommodation business in the UK
This article may have you pondering whether you should start a serviced accommodation business, as flexibility and high-rental yield are two very strong positives to any business, and the risks are easily manageable if done correctly. Serviced accommodation businesses have seen a notable boom over the last few years due to these positives, so if you’re thinking of starting one, here’s what you have to do!
Firstly, you have to find and buy a property. We recommend it if you’re new to the game, starting with just one, and working hard on ensuring this property is in top condition to increase your potential profit, also allowing you to learn the ropes of the industry as you go along. There are numerous purchasing options for properties so make sure you’re aware of the best way to buy for your circumstances! You should look into location, refurbishment costs and property type before you buy, as this will impact the amount you can earn once it’s set up as a serviced accommodation.
You should then look at furnishing your property and ensuring the interior is ready to go. Here at Derbnb, we take a lot of care with the interiors of our properties, with intricate touches dotted around to make them more attractive to the eye of those looking for somewhere to stay. You’ll need to buy furniture for the whole property, including beds, sofas and electronic items all of which resemble a comfortable home. Keeping to a high standard with all of this will guarantee more bookings as it’s clear you want to look after your guests!
You’ll then need to market your property. Luckily, there’s some excellent property management companies out there that will do this for you, working hard to maximise your income (hint hint). If you want to do this yourself, make sure the property is set up correctly on websites such as Airbnb and Booking.com, and you get some professional photos taken of the property to make it stand out to those looking for a place to stay. The more you put into your marketing, the more bookings you’ll get!
After these steps, it’s all about waiting for bookings, and ensuring your customer service is on point, reducing pain points for tenants and also ensuring they feel comfortable that their landlord is there for them if they need them. For any advice on any of the above, contact us today.
Looking for serviced accommodation management?
At Derbnb, we’re the experts in serviced accommodation management in Derby and the East Midlands. We look after dozens of properties in the area, and we’re always looking to take more on. We can help you with the process from start to finish, making it simple and efficient for you. What’s better, the more bookings you get, the happier we both are!
