Serviced Accommodation Mortgage

A serviced accommodation mortgage finances a property let on a short-term basis to guests, contractors or other temporary occupiers instead of long-term tenants.

Lenders price, value and assess affordability for short-term letting differently from a standard tenancy. They look at the property's use, the loan-to-value, the booking income and the location, and at whether the case is underwritten on holiday let, short-term let or commercial-style criteria.

Mortgage Lane arranges mortgages for serviced accommodation for first-time operators and experienced investors, matching each case to lenders whose criteria fit the letting model, the affordability method, the property type and the investment strategy.

For a flat in a managed block or scheme, the head lease and the block's rules can restrict short-term letting, so check them before you buy. Our serviced apartment mortgage guide covers those lease checks.

Loan to Value on a serviced accommodation mortgage

Each lender sets its own maximum loan to value on a serviced accommodation mortgage, and the income basis it uses for affordability can limit the loan further.

The loan to value (LTV) ratio, a basic measure in property financing, expresses the loan as a proportion of the property's value, so it decides how much capital an investor needs to put in. As an illustration, on a property valued at £500,000 at 70% loan to value, the maximum loan is £350,000 and the investor provides the remaining £150,000.

A higher loan to value reduces the capital needed at the outset. Lenders offering a higher LTV ratio can apply higher interest rates or stricter criteria, so the choice is a trade-off between lower upfront capital and a lower borrowing cost. An adviser checks each lender's current maximum for the property and the letting model.

How affordability is assessed: two methods

Lenders assess affordability on a serviced accommodation mortgage using one of two income figures, and the one they use determines the size of the loan.

Method 1: serviced accommodation rental figures

Some lenders, including some commercial buy-to-let lenders, assess affordability on the expected income from short-term letting. This method recognises the higher rental yields serviced accommodation can achieve compared with long-term rentals.

These lenders ask for projections of occupancy rates and nightly rates and test them against the location, demand and seasonality. A realistic, conservative projection is more likely to pass that test than an optimistic one, and a higher assessed income supports a larger loan.

Method 2: market AST rental income

Other buy-to-let lenders assess affordability on the rent the property would achieve on a long-term let, often described as the market Assured Shorthold Tenancy (AST) rental income. (In England, assured shorthold tenancies became assured periodic tenancies on 1 May 2026.)

Long-term rent is generally lower than serviced accommodation income, which creates affordability problems on higher-value properties. As an illustration, a property generating £4,000 a month from serviced accommodation might achieve only £2,000 a month on a long-term let. A lender assessing the case on the lower figure will offer a smaller loan amount, which can rule out the purchase of a higher-value property entirely.

Which method to target

On a property that trades well, a lender that assesses the short-term rental figures can support a larger loan than one using the long-term rent, because it is assessing a higher income. Lenders that understand the serviced accommodation model can offer terms that reflect the actual income.

The 90-day rule and serviced accommodation mortgages

The 90-day rule is a statutory limit in Greater London on letting a home for short stays without planning permission. Residential premises in Greater London can be used as temporary sleeping accommodation for up to 90 nights in a calendar year without counting as a change of use, provided the person providing the accommodation is liable to pay council tax on the premises (section 25A of the Greater London Council (General Powers) Act 1973, added by section 44 of the Deregulation Act 2015). The limit applies however the nights are booked, including through short-term rental platforms such as Airbnb, and letting for more nights needs planning permission.

Outside London the 90-night limit does not apply, but other planning and licensing rules can. In Scotland, for example, most short-term lets need a licence from the council before taking bookings, and in a short-term let control area a new short-term let is very likely to need planning permission (mygov.scot).

The rule affects a serviced accommodation mortgage in four ways. A cap on the number of letting nights reduces potential rental income and the property's profitability, which can make the case less attractive to some lenders or bring stricter criteria. It can also affect mortgage approval: some lenders may treat a property affected by the 90-day rule as higher risk, which can mean a larger deposit, a lower loan to value or a higher interest rate. The investment strategy may need another use for the property outside the permitted short-let nights, or longer lets for part of the year. Regulatory compliance matters too: letting beyond the limit without planning permission can lead to enforcement action by the council, which complicates both the mortgage and the management of the property.

Serviced accommodation mortgages for new investors

Prior property investment experience is not always required for a serviced accommodation mortgage.

Standard buy-to-let lenders can favour landlords with a track record. Some lenders in the serviced accommodation market will consider first-time investors who can demonstrate a sound business plan and an understanding of the local market, because the sector has its own revenue model.

First-time investors should expect to present more than a standard application: detailed financial projections, a market analysis and a clear management strategy for the property.

Airbnb and short-term letting platforms

Lenders that permit Airbnb and other short-term letting platforms exist, offering products designed for the income profile and regulatory requirements of short-term rental, but not every lender allows it.

The lenders that permit it apply criteria built for variable short-term rental income and understand the compliance requirements of the serviced accommodation market. The lender has to permit the letting model at application and after completion: a lender that does not allow it will decline the case however well the property trades.