Serviced Accommodation vs Traditional Lettings: Which Is More Profitable in the UK?

With rising interest rates, tighter regulation and changing tenant demand, UK landlords are increasingly asking a crucial question:

Is serviced accommodation more profitable than traditional buy-to-let?

The answer depends on your goals, property type and appetite for involvement. In this guide, we break down the real differences in income, costs, risk and management to help you decide which model delivers stronger returns in today’s UK market.

What Is Traditional Lettings?

Traditional lettings usually involve renting a property on a 6–12 month Assured Shorthold Tenancy (AST) to a long-term tenant.

Key features:

• Fixed monthly rent

• Lower day-to-day involvement

• Tenant responsible for most utilities

• Predictable, steady income
  

This model has historically been popular with landlords seeking stability. However, recent changes to legislation and tax treatment have reduced net yields for many.

What Is Serviced Accommodation?

Serviced accommodation (SA) is fully furnished, short- to medium-term rental designed for professionals, contractors, families relocating, insurers, and corporate guests.

Properties are typically let on:

• Nightly, weekly or monthly stays

• Corporate or insurance bookings

• Relocation and contractor demand
  

Companies such as AV Hughes Properties specialise in managing serviced accommodation for landlords, offering a hands-off solution while maximising occupancy and nightly rates.

Income Comparison: Which Pays More?

Traditional Lettings

• Rent capped by local market levels

• Annual increases are often modest

• Income remains static even during peak demand periods
  

Serviced Accommodation

• Higher nightly rates than AST equivalents

• Ability to flex pricing based on demand

• Strong performance in areas with:

  • Business parks

  • Hospitals

  • Major infrastructure projects

  • City centres
    

In many UK locations, a well-run serviced accommodation unit can generate 20–40% more gross income than a traditional let, when managed professionally.

Costs & Expenses: The Real Numbers

Traditional Lettings Costs

• Maintenance and compliance

• Letting agent fees (if used)

• Void periods

• Limited tax relief on mortgage interest
  

Serviced Accommodation Costs

• Utilities and council tax

• Cleaning and linen

• Furnishing and setup

• Management fees
  

While serviced accommodation has higher operating costs, the net profit is often stronger due to higher income, especially when occupancy is driven by corporate and long-stay bookings rather than tourism.

Regulation & Risk

Traditional lettings are becoming increasingly regulated, with:

• Proposed Renters Reform legislation

• Restrictions on possession

• Rising compliance obligations
  

Serviced accommodation operates under a different regulatory framework, often offering:

• Shorter contractual commitments

• Reduced risk of long-term arrears

• Greater control over the property
  

Professional operators like AV Hughes Properties also ensure compliance with local authority rules, safety standards, and licensing where required.

Management: Hands-On vs Hands-Off

A common misconception is that serviced accommodation is “too much work”.

In reality, landlords who partner with experienced operators benefit from:

• End-to-end management

• Guest vetting and corporate contracts

• Professional marketing and pricing

• One monthly statement, no day-to-day hassle
  

AV Hughes Properties works with landlords across the UK to turn properties into high-performing serviced accommodation assets, without landlords needing to manage bookings, guests or operations themselves.

Which Model Is Right for You?

Traditional letting may suit you if:

• You prioritise predictability over growth

• You prefer minimal involvement

• Your property is in a low-demand area
  

Serviced accommodation may suit you if:

• You want higher returns

• Your property is in a strong business or city location

• You’re open to professional management

• You want flexibility and asset control
  

Final Verdict: Profitability in 2026 and Beyond

In today’s UK market, serviced accommodation often outperforms traditional lettings on net profitability, particularly when run by experienced operators and targeted at corporate and long-stay demand.

For landlords looking to future-proof their investments, diversify income streams and regain control, serviced accommodation is no longer niche, it’s a strategic alternative.

Considering Serviced Accommodation?

If you’re exploring whether serviced accommodation could work for your property, AV Hughes Properties offers landlord partnerships, feasibility assessments and full management services across key UK locations.

Get expert insight before making your next move, because profitability isn’t just about rent, it’s about strategy. 📱+44 7845 025299

📧 info@avhughesproperties.com