Serviced accommodation

Serviced accommodation is a furnished, self-contained property let on a short-term basis with hotel-style services such as cleaning, utilities and linen included in the price. It is usually marketed to business travellers, contractors and relocating professionals for stays from a few nights to several months. Since 6 April 2025, income from serviced accommodation has been taxed as ordinary property income, following the abolition of the furnished holiday lettings regime in the Finance (No. 2) Act 2024.

How serviced accommodation differs from a standard let

A standard buy-to-let is let to a tenant under a tenancy agreement, the occupier pays the bills, and the arrangement runs for months or years. Serviced accommodation works the other way. The operator keeps control of the property, includes the bills and cleaning in a nightly or weekly rate, and turns the unit over frequently between guests. The guest is not a tenant and does not gain the security a tenancy carries. That higher turnover can produce stronger gross income, but it also brings far more management, marketing and void risk than a single annual let.

The tax position after the FHL abolition

Until April 2025, qualifying serviced accommodation could be treated as a furnished holiday let, which carried full mortgage interest deduction, capital allowances on furnishings and access to business asset disposal relief. Those advantages have gone. Income is now taxed under the standard property business rules, mortgage interest is restricted to a 20 per cent tax credit, and the property is treated like any other residential let for capital gains. The model still works for many operators, but the case now rests on operational returns rather than tax treatment.

Planning, council tax and business rates

Letting a property intensively as serviced accommodation can amount to a material change of use that requires planning permission, particularly outside London. On council tax, a unit available for short-term letting for enough days in the year can move onto business rates rather than council tax, though the thresholds are strict and many properties now attract a second-home council tax premium instead. The planning and registration detail is covered in the short-term lets entry.

Mortgage and lease consent

Most residential and standard buy-to-let mortgages do not permit short-term or serviced letting, so a specialist product or explicit lender consent is usually needed. Leasehold flats often prohibit short-term letting outright, and breaching that covenant can put the lease at risk. From working with self-managing landlords, we see consent treated as an afterthought far too often, when it is the first thing a lender or freeholder will check if a complaint reaches them.

Frequently asked questions

What is the difference between serviced accommodation and an Airbnb?

Airbnb is a booking platform. Serviced accommodation is the type of let, a furnished unit with services included, which may be marketed on Airbnb, Booking.com, directly, or to corporate clients.

Is serviced accommodation taxed as a business?

Income is taxed as property income under the standard rules since April 2025. The favourable furnished holiday lettings treatment that once gave it business-like reliefs has been abolished.

Do you pay council tax or business rates on serviced accommodation?

It depends on how many days the unit is available and actually let. Properties that meet the letting thresholds can fall under business rates, while others remain on council tax, sometimes with a second-home premium.