Serviced Accommodation vs Standard Letting: Which Is More Profitable?

Serviced accommodation (SA) — short-term furnished lets marketed on platforms like Airbnb and Booking.com — promises higher nightly rates than traditional letting. But the costs, regulations, and time commitment are significantly higher too. Here's an honest comparison.

Income potential

A property that rents for £1,000/month as a standard AST might generate £80-120/night as serviced accommodation. At 70% occupancy (typical for a good SA property), that's £1,680-2,520/month — significantly more. But occupancy is never guaranteed, and seasonal variation can be dramatic.

The costs you don't see

• Cleaning: £40-80 per turnover. With 8-10 turnovers per month, that's £320-800
• Utilities: You pay all bills (not the guest). Budget £200-400/month
• Laundry: Bed linen, towels — either laundry service or your own time
• Platform fees: Airbnb takes 3%, Booking.com takes 15%
• Consumables: Toiletries, kitchen supplies, welcome packs — £50-100/month
• Furnishing to hotel standard: Higher initial outlay (£5,000-15,000)
• Insurance: Standard landlord insurance doesn't cover SA — specialist policies cost more

Regulatory requirements

In many areas, short-term lets now require planning permission or a licence. London has a 90-night annual limit for short-term lets without planning permission. Scotland requires a short-term let licence. Check your local council's rules before committing — fines for unlicensed SA operations are increasing.

The 90-day rule and tax implications

SA income is treated as trading income for tax purposes (not property income), which means you can deduct mortgage interest in full — but you'll pay Class 2 and Class 4 National Insurance. If you let for fewer than 105 days per year with at least 210 available, you may qualify for Furnished Holiday Lettings (FHL) relief, though this regime is being phased out.

Time commitment

Standard letting: set up the tenancy, collect rent monthly, inspect twice a year. SA: manage bookings, coordinate cleaning, handle guest communications daily, deal with reviews, restock supplies, manage pricing dynamically. Even with a management company (taking 15-25%), the operational overhead is higher.

When SA makes sense

• Properties in tourist hotspots or city centres with strong short-stay demand
• You have time (or a management company) to handle operations
• Your mortgage allows it (many BTL mortgages prohibit SA)
• You're comfortable with income volatility

When standard letting wins

For most landlords, the predictability of a 12-month AST with a vetted tenant, steady rent, and minimal management time delivers better risk-adjusted returns. Use our yield calculator to compare both scenarios with realistic cost inputs.