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Serviced Apartment Let vs Traditional AST Buy-to-Let

Posted by Waqas Habib on June 16, 2022

serviced apartment let vs ast buy to let 1

Serviced apartment lets or Serviced accommodation in UK cities and towns are gaining increasing popularity with the staycation and short break leisure market.


Therefore, let us compare this income-generating rental model for investors and landlords to standard tenancies (also known as ASTs assured shorthold tenancies).




  • Serviced Apartment Rental Model


The purchase price varies by town and city. In essence, the rental models do not differ in property price.


  • Assured Shorthold Tenancy model


The purchase price varies by town and city. The price begins cheaper due to the reduced value of a city-outskirt property, which typically does not yield well for the serviced let model. STs (assured short-hold tenancies) are a popular option for investors and landlords.





  • Serviced Apartment Rental Model


An annual net return of between 8% and 10% of purchasing price (based on UK central city)


  • Assured Shorthold Tenancy model


An annual net return of between 3.5% and 5% of purchasing price (based on UK central city)




  • Serviced Apartment Rental model


 LTV of up to 75%


  • Assured Shorthold Tenancy model




How Important is the Location for property let?


  • Serviced Apartment Rental model

Location is critical for year-round occupancy. The highest yields are found in major UK towns and cities around the centre and business district.


  • Assured Shorthold Tenancy model

While the location is still critical, proximity to the city centre or business sector is not required. The UK’s main towns and city’s outskirts perform well on ASTs.


What is Market Demand of  Serviced Apartment Let & Assured Shorthold Tenancy Let?


  • Serviced Apartment Rental model

Demand from the short-stay leisure and corporate markets is exceptionally high. They are mutually beneficial: Monday–Thursday for business travellers and Friday–Sunday for leisure travellers.


  • Assured Shorthold Tenancy model

Post-graduates, commuters, singles, couples, and young families — many people opt to rent rather than own a property. As a result, demand is extremely high throughout the United Kingdom.


What are the Likely Void Periods?


  • Serviced Apartment Rental model

Occupancy is handled similarly to a hotel. Corporate rentals can be year-round with no vacancy and, if not, can be supplemented with leisure stays. Even functioning at the national hotel avg. of 70% would still earn up to 8% p.a.

  • Assured Shorthold Tenancy model

ASTs are sometimes taken on a six- or 12-month basis to ensure that no vacancies occur throughout the year. A vacant month may occur between a tenant’s departure and another’s relocation.


Do I Need a Management Company?


  • Serviced Apartment Rental model

It is highly recommended, as occupancy will be maximized through their affiliations with online agencies. This includes housekeeping, tenant care, and property maintenance to a very high quality.


  • Assured Shorthold Tenancy model

It is advisable, particularly if you own a purpose-built block. Leases, utility payments, repairs, maintenance, and complaints are all handled and resolved on your behalf.


Are There Any Tax Benefits?


  • Serviced Apartment Rental model

Serviced apartments may qualify as a Furnished Holiday Let (FHL), often more tax-efficient. An adequately documented application for Capital Allowance can result in significant tax savings. It’s worthwhile to obtain independent tax advice to determine how this will benefit you individually.


  • Assured Shorthold Tenancy model

Recent tax policy changes have been detrimental to landlords, including rising SDLT and eliminating mortgage tax credit. Depending on how you purchase your property, whether personally or through a corporation, and your special tax status, it’s advisable to obtain professional assistance to determine the most tax-efficient acquisition method.





If you own a home in a convenient, accessible area that will appeal to short-stay guests, it’s worth considering converting it to a serviced apartment.


If your house is currently fully furnished, you’re already halfway to making it acceptable for guests; however, the property must be configured similarly to a hotel. Landlords will be responsible for installing a quality television, bedding, and towels, thoroughly equipping the kitchen with pots, pans, dishes, and silverware, and, in most circumstances, providing tea, coffee, and milk, precisely like guests would in a hotel.


Consider the following:


  • Who will be in charge of bookings?
  • How will guests gain access to the property?
  • Who is going to do the laundry?
  • Who will be responsible for cleaning?
  • Will there be someone on hand to greet and assist guests?


Some companies will manage your property as serviced accommodation; they will handle guest bookings and changeovers, allowing guests into the house, and cleaning the property at the transformation and regularly for longer-staying guests.

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Established in 2019, Star Sterling is a family-run business based in the UK. As a cutting-edge investment advisory firm, we aim to deliver top-of-the-line investment services to all our valued clients. Leveraging a dynamic combination of finance and real estate expertise, we specialize in B2SA, R2SA, and BTL property investments.
Our professionals work tirelessly to identify the best investment solutions for estate agents, landlords, and investors and cultivate long-term partnerships for future success. We partner with businesses to find suitable properties to provide premium accommodation on a short-term basis to business travelers and contractors. By creating customized strategies for our clients, our services extend beyond the traditional confines of real estate

Our Typical Investors are

✓ People with a minimum of £7,500 to invest into Rent To Serviced Accommodation and £50,000 into Below Market Value property deals
✓ Looking to build high cash-flowing Rent To Serviced Accommodation portfolio (either passively or self-managed)
✓ Looking to buy Below Market Value residential properties with 8% to 10% annual return on capital
✓ Looking to achieve financial freedom through property investment in the UK
✓ Looking for safe and secure investment opportunities with low risk
✓ Looking to build a legacy for their family’s future

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