Serviced accommodation vs buy to let

Serviced accommodation and buy to let are the two main ways to earn rental income from residential property, and they suit very different investors. Buy to let means letting to a tenant on a long tenancy for one predictable monthly rent; serviced accommodation means letting furnished property on short stays to a stream of guests, with a service layer attached. The choice is not simply which earns more, but which balance of income, risk and effort fits you.

This guide compares the two head to head: income and void risk, running costs and management, tax and mortgages after the 2025 FHL changes, and which model suits which investor. We arrange finance for both as a broker and introducer, not a lender, and this is general information rather than investment or tax advice.

Income and void risk compared

On income, serviced accommodation has the higher ceiling. A well-located short let charging nightly rates across a busy season can gross considerably more than the same property would earn on a monthly tenancy, which is the headline attraction of the model. A buy to let earns less in gross terms but earns it predictably, one rent at a time, with a tenant in place for months or years.

On void risk the comparison reverses. A buy to let void is binary and occasional: the property is either let or empty between tenancies, but a let property earns its full rent every month. Serviced accommodation has constant micro-voids, the unbooked nights between stays, plus heavy seasonality, so a coastal let might be near-full in summer and largely empty in winter. The result is that SA income is higher on average in a strong location but far more variable, while buy to let income is lower but steadier. That variability is exactly why lenders assess the two differently.

Running costs and management compared

This is where the models diverge most sharply. A buy to let is relatively light to run: the tenant pays their own utilities and council tax, furnishing is minimal or none, and a letting agent can manage it for around 10 per cent of rent. Serviced accommodation is the opposite, a genuine operating business. The owner pays utilities, council tax or business rates, cleaning and laundry on every changeover, platform commissions, full furnishing, holiday let insurance and ongoing maintenance against constant turnover.

Those costs mean a large share of SA gross income, often 40 to 50 per cent or more, goes on running the property, before any mortgage. Management is heavier too: where a buy to let largely runs itself between tenancies, serviced accommodation needs continuous pricing, marketing, guest communication and changeover coordination, whether you do it yourself or pay a managing agent 15 to 25 per cent of income. The practical lesson is to compare the two on net income, not gross, because SA's gross advantage shrinks substantially once its costs come out.

Tax and mortgages after the 2025 changes

For years the tax position favoured holiday lets. Qualifying furnished holiday lets enjoyed full mortgage interest relief, capital allowances and certain capital gains and pension advantages under the FHL regime, which standard buy to lets had already lost. From April 2025 the FHL regime was abolished, so short-let property is now taxed broadly like buy to let, and the tax case that once distinguished the two has largely closed. Our FHL tax changes guide explains exactly what was removed.

The response in both markets has been the same: limited company ownership, where finance costs remain deductible against profits, which is why so many landlords across buy to let and serviced accommodation now buy through a company. On mortgages, buy to let loans are sized on a single monthly rent, while serviced accommodation and holiday let mortgages are sized on projected short-let income, are a more specialist niche with a smaller lender panel, and usually need a slightly larger deposit. Whether personal or company ownership suits you is a tax decision for your accountant; we arrange the finance once the structure is set.

Which model suits which investor?

Serviced accommodation suits investors who want the higher income ceiling, are comfortable with variability and seasonality, and either enjoy the operating work or will pay an operator to do it. It rewards involvement, a strong location and active management, and it works best in proven destinations or business-travel markets. It also demands more capital up front, because of furnishing and the larger deposit, and more attention to the growing regulatory rules.

Buy to let suits investors who want steadier, lower-effort income, predictable cash flow and a simpler regulatory and operational picture, accepting a lower gross return for that stability. Many investors hold both, using buy to lets for a reliable base and serviced accommodation for higher-yielding properties in the right locations. Neither is inherently better; the right answer depends on your appetite for work, variability and risk. When you have chosen, we arrange the finance for either, and for portfolios that mix the two.