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  • Short Term Rentals

    Serviced accommodation vs ASTs

    Hello. I own, with a BTL mortgage, a freehold house. It’s normally rented to cabin crew on 6-12 month AST. However it’s increasingly difficult to let it out to reliable and respectful people. 

    It’s in a town which has lots of private housing developments going on, near an airport and some town centre development. 

    I was approached by a served apartment company about shorter term let’s eg to construction staff who need temporary accommodation whilst they’re working on the new developments, or people who need temporary accommodation because of insurance claims. 

    I know that I have to check my mortgage to say if I can rent it on this basis and I will do due diligence on the company who I met with, but what is this scenario classed as both legally and for tax offsets - a holiday let, serviced accommodation or both? 

    What would be the main advantages and disadvantages of considering using this property in a different way to what I’d normally do?

    Thank you as always
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    Perhaps have a read of this thread Sharron.  There will be a strong possibility that it is a newbie fresh off a guru training course with no financial back-up.

    I would not touch this with a bargepole!

    Why not just do it yourself and hand it over to a management company like GuestReady?

    Your mortgage provider will likely decline this activity though ...

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    Hi Vanessa. Thank you for your reply. 

    After ready all the replies, is it allowable to pay this company the finder and management fee and me draw up the agreement etc? What sort of agreement would it be? What would I have to check with the mortgage company? 

    The thing is this company has already established contacts with all the contract managers of the construction companies - I don’t, so I couldn’t rent it on a SA basis as I’ve no contacts and no experience.
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    I have been researching SA strategies recently out of curiousity.

    David Smith has pointed out that much more stringent fire regs may apply if it is considered a hotel use.

    Planning is less likely to be an issue unless there is a material change in terms of coming and goings and noise compared to, say, a normal busy family. It is likely to still be covered by C3 use.

    We know that mortgages may be an issue unless holiday let finance is found or commercial finance.

    However, my main query is the inadvertant grant of a commercial tenancy to the SA business under the Landlord and Tenant Act 1954. It does not matter what the tenancy is called - an AST, a common law tenancy, a licence, whatever. It is the nature of the use which deterines the governing legislation.

    A R2R to an HMO will still be an AST as far as I understand, even if the head tenant is a company. However, if the use is serviced accomodation it is a business use and not residential. Therefore, the LTA 1954 will apply, I suspect. No-one knows in the industry, whether it is a R2R SA company or the  property owner, a letting agent who has introduced the parties, that the LTA 1954 confers substantial security of tenure to the tenant (i.e. the SA company). It is difficult to get them out after the term has expired. However, I doubt anyone practicing R2R whether landord or tenant knows this. Solicitors and surveyors do know the nature of various uses and what legislation applies and I don't think you will find many who would reccoment this strategy unless every single box is ticked. 

    One way to get around the security of tenure of the LTA is to contract out of it with the relevant notices but you will not see many people knowing or realising how to do this. The alternative is not to have a landlord or tenant arrangemnet but a management contract or joint venture arrangement.

    It would be very interesting if David Smith could comment on the above incase I am wrong on any points or if more clarity could be provided.


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    Rural Practice Chartered Surveyor. Experienced in estate management, residential investments, planning and development and rights for utility apparatus. All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    There are certainly risks associated with fire regs here.

    In relation to inadvertent grants of tenancy to a rent to rent company this should not be an issue. If a tenant lets a property and sub-lets the whole of it they are not deemed to be using it for commercial purposes and it falls outside the 1954 Act, so they don't get the protections of it. If they retain a part of the property to use as an office (for example) then the property will fall within the 1954 Act and that could cause a problem.

    And no, a R2R to an HMO will not be an AST. Any rental to someone who is not living there as their main home or to a company will not be an AST. The end tenancy to the occupier will be an AST.

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    David Smith
    Landlord & Tenant Solicitor
    Anthony Gold Solicitors

    Find me on LinkedIn: uk.linkedin.com/in/dsnsmith

    All opinions are my own and do not reflect those of my firm. No comment made should be taken as legal advice and you should consult a solicitor or other legal professional for advice on your specific situation.

    Hi David,

    You have added some clarity but I am not sure that a hotel kind of business use would be considered sub letting (Rent to Rent HMO obviously is subletting and so no risk of the Landlord and Tenant Act 1954 there).

    I have read legal comment on SA uses that indicates otherwise in respect of SA use. It does need clarity I feel.

    For example, I would expect that a hotel chain that rents premises would be agreeing to a commercial tenancy that would be governed by the LTA 1954. Any further comment you have would be appreciated, for example if it is clear that a SA use is actually subletting.

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    Rural Practice Chartered Surveyor. Experienced in estate management, residential investments, planning and development and rights for utility apparatus. All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Hi all. I just wanted to clarify a few things. 

    I would be the landlord and I would be paying the SA company a management fee for finding the SA people and managing it whilst they are there. It will not be used for night rentals like Air BnB but for example, a group of construction employees may be working on a construction project say for 3 months but need accommodation local for that job. 

    The company who approached me has placed several groups of people in my area, has a website/Facebook page. 

    I suppose to simplify things I could propose a normal finding/management fee and I still run it like an AST but can this be done for example for 3 months rather than 6 months say?
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    It sounds like you will be providing a lodging or boarding house which changes things significantly:

    • If the occupants retain their main home elsewhere it can't be an AST, unless they're migrant workers with no other UK address.
    • If it is not their main home HMO and Selective licencing don't apply.
    • If you provide services such as cleaning and/or meals it will become a licence to let, not a tenancy.
    • HMRC will consider this a trade, not an investment, so S24 doesn't apply.

    I don't think it will qualify as a FHL as the stays are longer than 31 days but it may still qualify for entrepreneurs relief (10% CGT) and possibly capital allowances - check with someone who is qualified to give property tax advice.

    Mortgages and insurance requirements will be different and may prove difficult to find.

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    A good teacher must know the rules; a good pupil, the exceptions.

    Martin H. Fischer


    I do a similar thing with contractors on a mon to Fri let. I had loads of contractors staying at my FHL so I decided to dedicate a 5 bed house to this as there are loads of projects and developments in the area. I manage it myself and we provide linen, cleaning etc. As the other poster says this means that it's not an HMO and is classed differently for s24. It's also 3 times more profitable than it would be as a normal BTL. As i understand from the company that deals with my FHL it is classed as holiday or serviced accomodation as long as there is a break every 28 days. As it's a mon to Fri let them there is a break every 5 days. Another income stream can be people who live in caravans or lodges on holiday parks, they usually have to live elsewhere for at least a month each year in the winter. A very good income can be earnt during a normally quiet time of year.
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