The rising popularity of serviced apartments attracts guests seeking hotel-like comforts while maintaining their privacy. To stand out among the competition and increase profitability, it’s crucial to enhance your marketing strategies for your multiple properties in town.
For a Serviced Accommodation venture in the UK, devote time to articulate the concept within a comprehensive business plan. Commencing your own small enterprise in the UK presents challenges, but a well-crafted business plan is instrumental for attaining triumph.
Comprehending every facet of the business concept is pivotal for the smooth operation of your Serviced Accommodation enterprise. The business plan you create serves as a blueprint, streamlining essential components into a cohesive strategy. This roadmap guides your startup journey and business trajectory.
Starting a Serviced Accommodation business poses difficulties, yet executed adeptly, it can yield substantial achievements.
What is serviced accommodation?
Serviced accommodation is experiencing significant growth in the British property rental market, offering real advantages to landlords and guests alike. Positioned between a conventional holiday-let and a hotel, this type of lodging is gaining popularity among tourists, business travelers, and individuals seeking extended stays.
What are the benefits to landlords of serviced accommodation?
Increasingly, landlords and property owners are turning to serviced accommodation as a way to maximize rental property yields.
Unlike traditional buy-to-let properties leased on a six-month assured shorthold tenancy (AST) agreement, serviced accommodation offers greater flexibility with the option to rent for short or extended periods.
This arrangement presents an opportunity to significantly boost rental income compared to monthly AST payments. For instance, renting out a property for short stays at £80 a night or £560 a week may surpass the £600 monthly income from an AST.
Although there might be occasional void periods, location and marketing efforts can lead to surpassing the monthly AST rental income.
Furthermore, property owners find that selling a short-term rental is often easier and quicker since there are no tenant considerations involved.
What are the drawbacks to landlords of serviced accommodation?
While the potential income from serviced accommodation can be appealing, several considerations should be kept in mind:
- The responsibility of arranging and covering the costs of essential services like housekeeping, WiFi, gas, and electricity lies with the landlord.
- Marketing expenses may be higher compared to regular buy-to-let rentals, as attracting guests regularly is necessary.
- Income may decrease during void periods, particularly in winter months.
- The property must be furnished to a high standard that aligns with the rental charges for guests.
- If self-managing the property, the landlord must be readily available to address guest inquiries and any arising issues. Alternatively, using a specialist letting agency incurs fees to be factored into yield calculations.
- Arranging a meet and greet for new guests or setting up a coded security box for key retrieval is essential.
What should serviced accommodation include?
Serviced accommodation offers a homely alternative to hotel rooms, providing a complete living space with all essentials included in the rental cost. Landlords are expected to provide:
- A fully equipped kitchen with all necessary cooking facilities, a dishwasher, and a washing machine.
- A bathroom.
- A furnished living area.
- WiFi and a TV.
- At least one separate bedroom or a dedicated sleeping area for studio apartments.
- All utilities, including water, electricity, and gas if applicable.
- Housekeeping service, either weekly or at more frequent intervals.
How to set up serviced accommodation
When establishing serviced accommodation, ensure the following are in place:
- Appropriate Mortgage: Avoid using buy-to-let or standard mortgages, as it breaches the lender’s terms.
- Renting Permission: Check if your lease permits short-term lets.
- Adequate Insurance: Obtain specialized insurance for comprehensive coverage.
- Planning Permission: Consult the local council for regulations on serviced accommodation, rental periods, and potential change of use requirements.
Additionally, fully furnish the property, ensure utilities and WiFi are operational, and arrange for servicing aspects like cleaning and laundry. You can handle this yourself if available, or hire a professional company to manage guests and services, which incurs additional costs.
How to start a serviced accommodation business:
Step 1. Business Details Crafting a comprehensive Serviced Accommodation business plan using the free template involves addressing key queries about your venture. Define your business, its offerings, target audience, goals, and more.
By providing clear insights, you’ll formulate a thorough business plan, crucial for launching the Serviced Accommodation business and seeking funding to cover startup expenses.
Step 2. Revenue Projections The Serviced Accommodation sector offers substantial potential. Accurate financial projections are essential for a robust business plan. Estimate annual earnings by listing products/services and inputting relevant financial details (costs and expenditures).
If data is lacking, research local and regional Serviced Accommodation enterprises for insights into potential revenue. Make informed estimates considering growth prospects.
Step 3. Market Insight For your Serviced Accommodation venture, a concise grasp of your industry and market is vital. This knowledge aids in formulating sound strategies and propelling your business forward.
Define your business location, delve into customer specifics, analyze competitors, and highlight your competitive advantages.
Step 4. Future Strategy Initiating and establishing your Serviced Accommodation business holds significance. Whether seeking government funding or not, strategic future planning is essential.
Detail your growth vision by outlining marketing strategies, sales tactics, and a comprehensive expansion plan for the upcoming years. Provide a detailed breakdown of each step to exhibit your progressive approach to yearly business growth.
Moreover, remember that business plans often spotlight key individuals. Discuss your role, along with other pivotal team members, to provide a holistic perspective.
Step 5. Financial Aspects Ultimately, financials form the crux of your plan. Regardless of your funding pursuit, your business plan demands precise financial projections. Our business plan builder simplifies this process by allowing you to input your projected monthly and yearly revenues. If figures are elusive due to your new venture, estimate based on your expectations. Seek guidance from UK Startups experts if needed.
For funding purposes, offer a comprehensive breakdown of your financial requirements, a feature facilitated by our free business plan template. Following these 5 steps is advisable for a robust Serviced Accommodation business plan. While there are additional vital aspects to consider in your startup journey, like funding and more, our template establishes a solid foundation.
After utilizing the initial template, ensure your plan receives a professional review, addressing queries and aiding your funding search. Connect directly with UKStartups.org or via the Small Business Startup Platform as a member.
If a Serviced Accommodation business isn’t your sole concept, explore other popular startup options fellow entrepreneurs have embraced.
What is the 90-day rule?
In Greater London, landlords are restricted to short-term lets for a maximum of 90 days annually, a measure implemented to safeguard long-term rental housing supply. The limited availability of rental properties drives up buy-to-let rental prices.
For short-term lets exceeding 90 days in a calendar year, landlords must seek planning permission, but approval is seldom granted for existing residential properties.
Since 2017, AirBnB automatically removes listings in London once they reach the 90-day threshold.
What type of mortgage do I need for serviced accommodation?
To finance serviced accommodation, a commercial mortgage is necessary as a standard buy-to-let mortgage won’t suffice. Buy-to-let mortgages are tailored for long-term rentals with minimum six-month ASTs.
A serviced accommodation mortgage might include a limit on the duration a property can be let to the same occupier, so it’s essential to consider any conditions while promoting your property.
Can leasehold studios become serviced accommodation?
Leasehold studios and apartments can be transformed into serviced accommodation, provided that the lease terms permit short-term lets. While many leasehold apartments allow AST rentals, it’s crucial to review the terms to ascertain whether short-term lets are allowed.