Serviced Accommodation Mortgages
Finance for short-let and serviced units, from £250,000
Mortgages underwritten on AST rent or projected short-let income, depending on the lender. Apart-hotels, city short-lets and units run through management agreements.
A serviced accommodation mortgage is a specialist buy-to-let or commercial mortgage for a property let on a short-term basis to business travellers, contractors, or tourists rather than on a standard long-term tenancy. High street lenders will not fund serviced accommodation. You need a specialist lender that explicitly permits SA use in its mortgage conditions, or a commercial mortgage provider where the property is operated as a business. Fox Davidson arranges serviced accommodation finance from £250,000 across the UK. We do not charge broker fees on most cases.
Arranging finance for a serviced accommodation property? Tell us the deal and we will identify the lenders with the right appetite and the most competitive terms.
Call 03300 100313What is a serviced accommodation mortgage?
Serviced accommodation is residential property let on short-term stays, typically between one night and three months, to business travellers, contractors, relocating professionals, or tourists seeking more space than a hotel room. The property is furnished, managed, and available through platforms including Airbnb, Booking.com, and direct corporate lets.
For mortgage purposes, serviced accommodation sits in a distinct category. It is not a standard buy-to-let, because the tenancy arrangements are not assured shorthold tenancies. It is not a regulated bridging loan, because the term is long rather than short. And it is not a holiday let mortgage in most cases, because the target market is business and contractor use rather than leisure. This distinction matters because it determines which lenders will consider the application and how affordability is assessed.
Most specialist BTL lenders that accept SA use will permit the letting arrangement provided the property can revert to a standard AST without refinancing. The mortgage is structured as a long-term interest-only or repayment facility, and the ICR is calculated on the AST equivalent rent, not on projected SA income, because SA occupancy is inherently more variable than a long-term tenancy.
For larger SA operations, multiple units, converted commercial premises, or full aparthotel setups, a commercial mortgage is more appropriate than a specialist BTL product. The underwriting approach is different, with the lender assessing the business as a whole rather than a property-by-property ICR calculation.
How do lenders assess income for a serviced accommodation mortgage?
This is the question that trips up most SA investors approaching lenders without specialist broker support. The answer is consistent across most specialist BTL lenders: they use the AST equivalent rent, not the SA income.
The AST equivalent rent is the open market rental value of the property on a standard 12-month assured shorthold tenancy. It is confirmed by the lender's RICS valuer at the same time as the property valuation. Lenders use this figure because it represents the income the property would reliably generate if the SA strategy failed or market conditions changed, it is the floor, not the ceiling, of what the property can earn.
The ICR calculation works as follows. The lender takes the monthly AST rent and divides it by the monthly mortgage interest calculated at a stress rate, typically 0.5 to 1 percentage point above the actual pay rate. The result must meet the lender's minimum coverage ratio: 125% for basic rate taxpayers, and 145% for higher rate taxpayers at most specialist lenders.
| Borrower type | Minimum ICR | Stress rate (typical) | Example: AST rent £2,500/mo, loan £350,000 |
|---|---|---|---|
| Basic rate taxpayer | 125% | Pay rate or 5.5% (whichever higher) | Max monthly interest: £2,000. Passes at £350k on a 5.5% stress rate (£1,604/mo) |
| Higher rate taxpayer | 145% | Pay rate or 5.5% (whichever higher) | Max monthly interest: £1,724. Passes at £350k on a 5.5% stress rate (£1,604/mo) |
| Limited company | 125% | Pay rate or 5.5% (whichever higher) | Same as basic rate; company structure does not change ICR threshold |
Rates are indicative. Stress rates vary by lender. The worked example uses a £500,000 property at 70% LTV (£350,000 loan) with a confirmed AST rent of £2,500 per month. ICR figures illustrate the calculation only, actual lender stress rates and coverage requirements must be confirmed at application.
Where the ICR does not pass at 75% LTV, lenders will reduce the loan rather than reject the case. The right broker will model this before application to avoid formal declines, which can affect your credit profile.
According to the Office for National Statistics, guests spent 90.1 million nights in UK short-term rental properties in 2024, with England accounting for 70.3 million guest nights, approximately 78% of the total. Westminster, Cornwall, Edinburgh, and the Scottish Highlands recorded the highest volumes. Source: ONS, Short-term lets through online collaborative economy platforms, UK: January to December 2024.
What rates are available on a serviced accommodation mortgage?
Rates for serviced accommodation mortgages reflect the specialist nature of the product. Most lenders price SA mortgages at a premium of between 0.5% and 1.5% per annum above their equivalent standard BTL rates, to account for the perceived additional risk of short-term letting. With the Bank of England base rate at 3.75% as of April 2026, indicative rates for SA mortgages currently sit in the following ranges.
| Product type | LTV | Indicative rate range | Notes |
|---|---|---|---|
| Specialist BTL (SA permitted) | 60% LTV | 4.5%-5.5% pa | Best rates for experienced landlords with strong credit |
| Specialist BTL (SA permitted) | 75% LTV | 5.5%-6.5% pa | Rate increases with LTV; ICR must still be satisfied |
| Limited company BTL (SA permitted) | 60-75% LTV | 5.0%-6.5% pa | Directors' guarantees required |
| Commercial mortgage (SA operation) | Up to 70% LTV | 5.5%-7.5% pa | Assessed on business income; appropriate for multiple units or aparthotel |
All rates are indicative as at April 2026 and subject to lender assessment, credit profile, property type, and market conditions. Rates change regularly. Actual terms will be confirmed at decision in principle.
The pricing differential between an SA-permitted BTL and a standard BTL product has narrowed as more specialist lenders have entered the market. Two-year and five-year fixed rates are available. Five-year fixes are more common because they provide certainty over the medium term, which is particularly valuable for SA operators whose income can be seasonal.
What LTV is available on a serviced accommodation mortgage?
Most specialist BTL lenders offering SA-permitted products cap LTV at 75% of the lower of purchase price or open market value. Some lenders will extend to 80% LTV where the mortgage conditions allow the property to revert to a standard long-term tenancy within six months, giving the lender a clear path to recovery if the SA strategy is not maintained.
The achievable LTV depends on three factors working together. First, the ICR must pass at the lender's stress rate: a property with a low AST equivalent rent relative to its value will hit the ICR ceiling before the LTV ceiling. Second, the lender's maximum LTV for SA-permitted products may sit below their standard BTL cap. Third, the property type and location affect LTV, city centre apartments in high SA demand areas typically achieve better terms than more unusual property types or remote locations.
For commercial mortgage structures covering multiple SA units or an aparthotel operation, LTV is typically calculated at 65-70%, with larger and more experienced operators accessing the higher end of that range.
What are the eligibility criteria for a serviced accommodation mortgage?
Criteria vary by lender and by whether you are using a specialist BTL or commercial mortgage structure. The following covers the main underwriting considerations across the specialist lender market.
| Criteria area | Typical requirement |
|---|---|
| Minimum age | 21 (some lenders 25); maximum 70-80 at end of term |
| Property type | Standard residential construction; flats, houses, and apartments accepted |
| Minimum property value | Typically £100,000-£150,000; Fox Davidson minimum loan £250,000 |
| Landlord experience | Some lenders require existing portfolio; others accept first-time landlords if income strong |
| Credit profile | Clean credit preferred; most lenders decline if mortgage arrears in last 3 years |
| Income/employment | Employed, self-employed, or existing rental portfolio income all accepted; evidenced in standard way |
| SA management | Self-managed or via management company both accepted; management agreement may be requested |
| Short-let clause | Lender's mortgage conditions must explicitly permit SA use, standard BTL conditions will not |
| Lease restrictions | Leasehold properties must permit short-term letting; freeholder consent may be needed |
| Location | UK-wide; some lenders restrict certain postcodes or towns |
One area that catches investors out is the lease. A significant proportion of apartments, the most common property type for SA, contain lease clauses that prohibit subletting on terms of less than six months. If the lease prohibits SA use, the lender will not proceed regardless of the strength of the application. Your solicitor must review the lease specifically for this before exchange of contracts.
Which lenders offer serviced accommodation mortgages in the UK?
The specialist SA mortgage market has grown significantly since 2020. Demand from landlords pivoting away from standard ASTs, partly due to legislative changes affecting the PRS and partly due to the income premium SA can generate, has driven more lenders to develop explicit SA-permitted products.
The lender market falls into three categories. Specialist BTL lenders with dedicated SA products are the most common source for residential SA properties. These are not high street names but established intermediary lenders with national coverage. Commercial mortgage lenders are appropriate for larger SA operations, particularly where multiple units or an aparthotel business model is in place. Bridging lenders provide short-term acquisition and refurbishment finance before refinancing onto the long-term SA mortgage.
No single lender dominates the SA market. Lender appetite varies by property location, borrower experience, and the size of the SA operation. Some lenders will only consider SA use in urban centres with demonstrably strong corporate demand. Others are more flexible on geography but tighter on borrower experience. Matching the right lender to the specific case is where specialist broker knowledge directly affects the outcome.
According to The Intermediary, Shawbrook Bank enhanced its lending criteria for serviced accommodation in June 2025, reflecting growing lender appetite for the sector and increased demand from landlords seeking SA-compliant mortgage products. Source: The Intermediary, June 2025.
What is the difference between a serviced accommodation mortgage and a holiday let mortgage?
The two products are frequently confused but serve different markets and are assessed differently by lenders.
| Feature | Serviced accommodation mortgage | Holiday let mortgage |
|---|---|---|
| Primary market | Business travellers, contractors, corporate lets | Leisure tourists, families, short breaks |
| Typical location | Urban centres, commuter belt, near business parks | Coastal, rural, tourist destinations |
| Income assessment | AST equivalent rent (most lenders) | SA projected income or peak/off-peak average (some lenders) |
| ICR | 125-145% on AST rent at stress rate | 125-145% on projected holiday let income (lender-specific) |
| Personal occupation | Not permitted | Often permitted for a defined number of weeks per year |
| Maximum LTV | Up to 75-80% | Up to 75-80% |
| Tax (pre April 2025) | Standard property income rules | FHL rules (abolished April 2025) |
Note that the Furnished Holiday Let tax regime was abolished from 6 April 2025. Both SA and holiday let income is now taxed as property income under the standard rules. The distinction between the two products remains relevant for mortgage purposes, but the historical tax advantage of qualifying as an FHL no longer applies.
Can I use a limited company for a serviced accommodation mortgage?
Yes, and for higher rate taxpayers it is often the preferred structure. Most specialist lenders that accept SA use will also lend to a limited company SPV, typically with a SIC code of 68209 (letting and operating of own or leased real estate) or 55900 (other accommodation). Some lenders require the company to have been incorporated for a minimum period, typically three to six months, before application.
Directors' personal guarantees are required by virtually all lenders for limited company SA mortgages. The ICR calculation is the same as for an individual basic rate taxpayer: 125% of AST equivalent rent at the lender's stress rate. The company structure does not reduce the ICR threshold.
The tax efficiency of the limited company structure comes from being able to deduct mortgage interest in full against rental income (which individual landlords can no longer do at their marginal rate), and from being able to retain profits in the company at corporation tax rates rather than drawing them as personal income. Whether the limited company structure is appropriate depends on your personal tax position, withdrawal requirements, and broader portfolio strategy. We would recommend taking independent tax advice before choosing your borrowing structure.
Using bridging finance for serviced accommodation
Bridging finance is commonly used by SA investors in two scenarios: purchasing a property at auction or before standard mortgage timescales allow, and funding refurbishment works to bring a property up to the standard required for SA operation before refinancing onto a long-term SA mortgage.
In the refurbishment scenario, a bridging loan funds the purchase and the fit-out, high-quality furnishing, kitchen upgrade, bathroom renovation, and any structural works. Once the property is SA-ready, it refinances onto a specialist BTL or commercial mortgage. The exit strategy for the bridge needs to be confirmed at the bridging application stage: the lender will want to know which SA mortgage lender will refinance the completed property, and that their criteria can be met.
Fox Davidson arranges both the bridging loan and the subsequent SA mortgage, which simplifies the transition and avoids the risk of the bridge completing on a property that then cannot be refinanced.
Serviced accommodation mortgage, worked example
A property investor purchases a two-bedroom apartment in Manchester at £500,000 to operate as serviced accommodation targeting business travellers and contractors. The property is leasehold, and the lease has been reviewed, it permits short-term letting without restriction.
The RICS valuer confirms an open market value of £500,000 and an AST equivalent rent of £2,500 per month. The investor applies for a 70% LTV specialist BTL mortgage with SA permission: loan amount £350,000, five-year fixed rate at 5.5% per annum (interest-only).
Monthly interest: £350,000 × 5.5% / 12 = £1,604 per month. ICR at basic rate: £2,500 / £1,604 = 1.56x, well above the 125% minimum. ICR at higher rate: £2,500 / £1,604 = 1.56x, above the 145% minimum. The application passes ICR at 70% LTV for both borrower tax positions.
Annual mortgage cost: £19,250 in interest. The investor targets nightly rates of £95 to £125, with an occupancy assumption of 70%. Projected annual SA revenue at 70% occupancy and £110 average: approximately £28,100. After platform fees of 15% (approximately £4,200) and management and cleaning costs, the net yield is meaningfully ahead of the AST equivalent (£30,000 per annum). The ICR safety margin means the investment is viable even if SA income falls significantly short of projections.
How to apply for a serviced accommodation mortgage
The application process follows the same broad structure as any specialist buy-to-let, but with additional checks specific to SA use.
Establish what the property would achieve as a standard long-term let and model your SA income projections. The AST rent is what the lender will use; the SA projections are for your own investment decision.
Specialist BTL for a single residential SA property. Commercial mortgage for multiple units or an aparthotel operation. Bridging loan if the property needs refurbishment before it is SA-ready or mortgageable.
For leasehold properties, confirm the lease permits short-term letting. In London, confirm whether the 90-day rule affects your intended operation. Your solicitor should advise on this before exchange.
Personal ID, proof of income, three months' bank statements. For limited company applications: incorporation documents, shareholder register, and directors' identification. Management agreement if you are using a third-party SA operator.
We identify lenders with confirmed appetite for your specific SA use case, structure the application, and manage the process from decision in principle through to completion. Decision in principle typically within 24 to 48 hours.
The lender's valuer confirms property value, condition, and AST equivalent rent. Your solicitor completes title work, lease review, and any freeholder consents. Straightforward cases typically complete within four to eight weeks of application.
Common questions about serviced accommodation mortgages
What is a serviced accommodation mortgage?
A specialist buy-to-let or commercial mortgage arranged for a property let on a short-term basis, typically between one night and three months, to business travellers, contractors, or tourists. Standard buy-to-let mortgage conditions prohibit this use. SA mortgages come from specialist lenders that explicitly permit short-term letting in their product terms.
Can Fox Davidson arrange a serviced accommodation mortgage?
Yes. Fox Davidson arranges specialist BTL and commercial mortgages for SA properties from £250,000 across the UK. We do not charge broker fees on most cases and access lenders that understand the SA model and how to underwrite it.
What LTV is available on a serviced accommodation mortgage?
Up to 75% LTV with most specialist lenders. Some lenders extend to 80% where the property can revert to a standard long-term tenancy within six months. The actual LTV depends on the ICR calculation: a property with a low AST rent relative to its value may be constrained by ICR before reaching the lender's LTV cap.
How do lenders calculate affordability for serviced accommodation?
Using the AST equivalent rent, what the property would achieve on a standard 12-month assured shorthold tenancy, confirmed by the RICS valuer. The ICR requirement is 125% for basic rate taxpayers and 145% for higher rate taxpayers, tested at the lender's stress rate, typically 5.5% or above regardless of the actual pay rate.
What is the minimum loan for a serviced accommodation mortgage through Fox Davidson?
£250,000. This applies to both specialist BTL and commercial mortgage routes. We do not arrange consumer buy-to-let or residential products below this threshold.
Do I need a business plan for a serviced accommodation mortgage?
For specialist BTL products, a formal business plan is not always required, though some lenders ask for a management plan or occupancy projections. For commercial mortgage structures, a business plan covering nightly rates, occupancy assumptions, platform strategy, and operating costs is standard.
What is the difference between a serviced accommodation mortgage and a holiday let mortgage?
SA mortgages serve urban short-term lets to business users, assessed on AST equivalent rent. Holiday let mortgages serve leisure properties in tourist areas, sometimes assessed on projected holiday income. Personal owner occupation is typically permitted on holiday let products but not on SA mortgages. Both products sit outside the high street lender market and require specialist intermediary sourcing.
Will high street lenders fund serviced accommodation?
No. Standard BTL mortgage conditions from high street lenders and building societies prohibit short-term or holiday letting. Using a standard BTL mortgage for SA without the lender's consent is a breach of mortgage conditions and could result in the lender calling in the loan. You need a lender that explicitly permits SA use in its product documentation.
Can I use a limited company SPV for a serviced accommodation mortgage?
Yes. Most specialist SA lenders will lend to a limited company. SIC codes 68209 and 55900 are typically appropriate. Directors' personal guarantees are required. The ICR is assessed at 125% of AST equivalent rent, the same as for an individual basic rate taxpayer. Limited company ownership does not change the ICR threshold but may offer tax efficiency for higher rate taxpayers.
What credit history do I need for a serviced accommodation mortgage?
Most specialist lenders require a clean credit profile with no mortgage arrears, CCJs, or defaults in the past three years. Some will consider minor adverse credit if resolved and more than three years old. Commercial mortgage lenders may take a more flexible view on personal credit where the business case and security are strong.
Does my lease allow serviced accommodation letting?
Not necessarily. Many leasehold flats and apartments prohibit subletting on terms of less than six months. This directly prevents SA use without freeholder consent, which may or may not be granted. Always have your solicitor review the lease specifically for short-let restrictions before committing to purchase a leasehold property for SA.
Do I need planning permission to run serviced accommodation?
In most cases no, provided the property remains in residential use class C3. However, operating multiple units in a block, offering hotel-style services, or running a full aparthotel business may attract local authority scrutiny as a potential change of use to C1. Licensing requirements vary by council. Check with your solicitor and the local planning authority before committing to a large-scale SA operation.
Can I use bridging finance to buy and refurbish before converting to serviced accommodation?
Yes, and this is one of the most common routes into SA for investors purchasing properties that need fit-out before they are rental-ready. The bridge funds the purchase and works. The exit is refinance onto a specialist SA mortgage once the property is complete. The refinance lender and their SA criteria need to be confirmed at the bridging application stage. Fox Davidson can arrange both sides of this transaction.
What is the 90-day rule and how does it affect serviced accommodation in London?
The 90-day rule, introduced by the Deregulation Act 2015, limits short-term letting of entire residential properties in Greater London to 90 nights per calendar year without planning consent. Exceeding this requires a change-of-use planning permission. The rule affects your SA operating model and income projections but does not change the mortgage product required. Outside London, no equivalent national rule applies, though some local authorities are developing their own registration schemes.
What happens if my serviced accommodation income falls and I cannot cover the mortgage?
Because the mortgage is assessed on AST equivalent rent, not SA income, you can convert the property to a standard long-term tenancy without needing to refinance in most cases, provided your lender permits AST use alongside SA use. This gives you a reliable fallback. If you are servicing the mortgage from SA income, build a reserve to cover a minimum of three to six months of mortgage payments to protect against seasonal voids or platform disruption.
Serviced accommodation finance requires lenders that understand the model. We know which ones do, and we arrange both the mortgage and any bridging you need to get there.
Call 03300 100313All rates and figures are indicative only and subject to lender assessment, credit profile, property type, and market conditions as at April 2026. Rates change regularly and are not guaranteed. The Furnished Holiday Let tax regime was abolished from 6 April 2025. This page does not constitute tax advice, consult a qualified tax adviser regarding your personal position. Your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.