What Is SA In Property? 🧐 

The acronym SA stands for serviced accommodation in the UK property industry.

Serviced accommodation rentals are for short stays ranging from a few days to a few weeks, and occasionally a few months.  

They are also known as short-term rentals, vacation rentals or holiday rentals. 

How Is SA Different To Buy-to-Let?

Rather than renting properties out on a standard tenancy that could be 6-12 months, SA (serviced accommodation) caters to people who want to rent a place on a nightly or weekly basis. 

However, it’s also becoming more popular for people to stay for 1-3 months too and this would still fall under serviced accommodation because landlords aren’t really going to rent out their buy-to-let on a 3-month contract. 

Serviced accommodation rentals are more like a hotel experience than a standard buy-to-let, but SA is definitely not the same as hotels.

Facilities

Hotels will tend to have basic facilities in the room like an en-suite bathroom and maybe tea and coffee facilities. 

Serviced accommodation will feel more like a home away from home. 

With hotels, you’d only really get sofas and lounge areas in more luxury establishments, but with serviced accommodation, it’s much more common to have lounge areas with furniture to match.

Serviced accommodation rentals generally come with fully equipped kitchens too and can sometimes come with washing machines.

They’re also more likely than hotels to have workspaces like desks.

You’ll of course want to have high-speed wifi included in the cost of serviced accommodation too. I’m not sure why some hotels still charge for this. 

Location Dependence

With serviced accommodation, the importance of picking a good location is even more important than standard rentals. 

You’ll generally want to have really good transport links for serviced accommodation. 

And if you’re specifically catering to tourists you’ll want local tourist attractions in easy reach. 

If you’re looking at business or corporate travellers, then you want to consider where they need to be for work and how close it will be to the accommodation. 

Who Uses Serviced Accommodation?

The types of people that would use serviced accommodation tend to be tourists or business travellers and depending on your strategy you can focus on a certain type of customer. 

Tourists will use serviced accommodation as a base for doing any tourism.

People travelling for work may use it on weekdays if they’re on a long project away from their normal workplace. 

It’s useful for business travellers because sometimes it may be unclear how long they’ll be on a certain project, but they won’t want to sign up for a 6-12 month tenancy.

Some serviced accommodation providers will sign contracts with companies to provide accommodation for their employees. 

There can also be overlap between the two as both will likely look for good transport links. 

It’s important to consider what kind of traveller you are looking for so you can cater to them appropriately. 

How Do I Get Customers For Serviced Accommodation?

Most serviced accommodation providers will use existing marketplaces to promote their properties to potential customers. 

The biggest marketplaces for serviced accommodation are:

Airbnb

Booking.com

Vrbo

Expedia

If you are looking for corporate customers you could also look into doing cold outreach directly.

Yields And Profits Compared To Standard Buy To Lets

In general, serviced accommodation should provide higher yields and cash flow compared to standard buy-to-let tenancies.

For example, if a place costs you £1200 in monthly rent a month, it might go for £120 or more per night as a short-term rental. 

If you had an occupancy rate of around 70%, you’d bring in around £2520 a month before costs. 

These are very back-of-napkin numbers by the way.

Use something like AirDNA to get more info on occupancy rates and rates in the places you’re interested in.

Risks Compared To Standard Buy To Lets

Seasonality In Demand

With serviced accommodation, you are more likely to get seasonality in demand.

For example, a place by the coast is going to have a lot more demand in the summer months and a lot less in the winter months (especially in the UK).

With standard buy-to-lets, everyone needs a place to live and rental accommodation is in short supply so you’re unlikely to suffer from seasonality in the same way. 

Regulation and Legal

Some councils and cities around the world are clamping down on short-term rentals as they don’t want a massive imbalance of holiday rentals compared to normal tenancies.

This is because they need to make it affordable for their own citizens to be able to rent in the city. 

An example is the London 90-day rule where you can only let out a property for 90 days in a year as a short-term rental (unless you reclassify the property as a hotel/guest house, but that will take time and is subject to approval).

You may also have to consider how things like taxes, insurance and safety standards could be different for serviced accommodation. 

Higher Running Costs And Effort

So you can make a higher yield with serviced accommodation, but there’s also a LOT more work involved and higher costs. 

For example, with serviced accommodation you need to:

  • Check people in
  • Check people out
  • Clean between stays
  • Sort any issues quickly
  • Be available for any customer queries
  • Spend more on maintenance in general
  • Be on top of marketing the property for high occupancy

If you can run a tight ship though, it could be very successful. 

While standard buy-to-lets will have maintenance issues from time to time, they’re a lot more hands-off than serviced accommodation. 

Although it’s worth noting you can use property managers for both serviced accommodation and standard buy-to-lets. 

Further Reading

If you’re really feeling up to it and want to learn a bit more, you could watch this 10 hour video on serviced accommodation. 

As far as investing in property goes, serviced accommodation is probably one of the most hands-on methods. It’s so hands it’s more akin to a business than investing.

If you want to go to the opposite end of the spectrum you could look at an extremely hands-off form of investing. That would be investing in REITs.