Serviced accommodation vs buy-to-let: the real 2026 numbers
Serviced accommodation (SA) beats a standard buy-to-let on gross revenue almost every time in 2026. The interesting question is whether it wins on net — after costs, tax, time and risk. For most well-located UK properties in 2026, the answer is yes, but not by as much as SA marketing implies.
This guide runs the real numbers side by side using a 2-bed flat in central Manchester and a 2-bed flat in Zone 2 London — including the tax position that buy-to-let landlords increasingly overlook.
The gross revenue difference
2-bed flat, central Manchester, 2026:
• Buy-to-let AST: £1,300 pcm × 12 = £15,600 gross per year.
• Serviced accommodation (managed): £36,000 gross per year at 74% occupancy and £135 ADR.
2-bed flat, London Zone 2, 2026:
• Buy-to-let AST: £2,400 pcm × 12 = £28,800 gross per year.
• Serviced accommodation (managed, mixed short + mid-term to stay under 90-day cap): £58,000 gross per year.
SA is roughly 2.0x–2.3x gross of AST across most UK markets in 2026. The gap is largest in strong tourism/business markets and smallest in commuter suburbs with weak leisure demand.
Costs — where SA gives some of the gap back
SA has real running costs a BTL landlord never sees. On the same 2-bed Manchester flat:
• Utilities, broadband, TV: £2,600 (BTL £0 — tenant pays).
• Cleaning and linen: £5,500 (BTL £0).
• Consumables and replacements: £1,600 (BTL £400).
• Council tax / business rates (with SBR relief, often £0): £0–£1,800 (BTL £0 — tenant pays).
• Full-service management: £3,600 at 10% (BTL £1,300 at ~8% letting fees).
• Platform fees: £2,900 blended (BTL £0).
Total SA running cost roughly £16,200. Total BTL running cost roughly £2,300 plus a void of ~£900. Net difference: SA net £19,800, BTL net £12,400.
Tax — where BTL quietly loses ground
Since Section 24 fully phased in, individual buy-to-let landlords can no longer deduct mortgage interest from rental income — they get a 20% tax credit instead. Higher-rate taxpayers therefore pay materially more tax on BTL income than they used to.
Serviced accommodation, provided it qualifies as a Furnished Holiday Let (FHL) under HMRC rules, has historically had more generous treatment — full interest deductibility, capital allowances on furniture, and business asset disposal relief on sale. From April 2025 the FHL regime was abolished, and short-let / SA income is now treated more like standard property income, though capital allowances rules remain more generous than for AST.
Net-of-tax outcome in 2026 for a higher-rate taxpayer on the Manchester flat: SA typically clears £14,000–£16,000 net-net, BTL typically clears £7,500–£9,500 net-net. Always run your own numbers with an accountant — every landlord's tax position is different.
Time cost — the number nobody tells you
Self-managed BTL: 15–30 hours per year on average — mostly around tenant changeover, safety certificates and the occasional maintenance issue.
Self-managed SA: 250–400 hours per year — pricing, listings, guest messaging (guests message a lot), cleaning coordination, restocking, reviews, tax admin.
Fully-managed SA (10% fee): 5–10 hours per year — signing statements, approving major repairs, tax paperwork. This is why professional management makes or breaks SA economics for most landlords.
The comparison that actually matters for most landlords: BTL net vs fully-managed SA net. Not BTL vs self-managed SA — that isn't the same job.
Risk — which model is actually safer in 2026
BTL risks: tenant arrears, Section 8 delays (currently 6–10 months in some London courts), deposit disputes, damage discovered only at check-out, Renters' Rights Act changes tightening possession routes.
SA risks: demand seasonality, regulatory change (short-let register, local Article 4 directions), review-driven revenue cliffs, higher operational complexity.
For a landlord who wants zero operational risk, Guaranteed Rent (R2SA) hybridises both — the operator takes short-let risk, the landlord receives a fixed monthly rent for 3–5 years. See our R2SA guide.
Frequently asked
Is serviced accommodation always better than buy-to-let in 2026?
No. SA wins in tourism and business markets (London, Manchester, Edinburgh, Liverpool, Bath, central Birmingham, university cities). It loses in weak leisure markets and pure commuter suburbs where AST demand is strong and short-let ADRs are low.
Is the FHL tax regime still available in 2026?
No — the Furnished Holiday Let regime was abolished from April 2025. Short-let and SA income is now taxed under standard property income rules, though capital allowances treatment for furniture and equipment remains more favourable than for long-let AST properties. Speak to an accountant for your specific position.
Do I need to register a serviced accommodation business?
The English short-let national register is rolling out through 2026 and covers all short lets. Business rates (with Small Business Rates Relief typically bringing it to £0) generally applies once a property is available for short-let use 140+ days per year. Companies House registration is only needed if you incorporate.
Can I switch a buy-to-let to serviced accommodation?
Yes, subject to mortgage consent, freeholder consent, insurance, and any local licensing/planning requirements. AV Property handles the transition for landlords across London, Manchester, Liverpool, Birmingham and Kent.
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