Serviced Accommodation Growth 2026: A Landlord’s Guide

Discover why the UK serviced accommodation market is hitting £6.5bn in 2026. Learn how landlords are beating the Renters’ Rights Act and boosting yields by 15%

February 14th, 2026

The serviced accommodation (SA) sector is no longer just a niche alternative to hotels; by 2026, it has cemented its position as a high-growth, institutional-grade asset class. Valued at approximately £1.7 billion in 2023, the market is projected to reach £6.52 billion by 2033, growing at a compound annual rate of 8.8%.

“The serviced apartment market within the UK is predicted to double in value to £6.52 billion by 2033… with corporate relocation demand driving sustained growth in 2026 and beyond.” — Global Serviced Apartment Industry Report (GSAIR)

Is that attention grabbing?

This growth is being fueled by a fundamental shift in how people live, work, and travel in our post-pandemic economy.

Market Value and Investment Trends

Investor confidence in serviced apartments and “aparthotels” has surged, often outperforming traditional buy-to-let and hospitality models due to leaner operating costs and higher profit margins (typically 15% higher than full-service hotels).

Transaction Volumes: Between 2024 and mid-2025, the UK saw over £500 million in sector deals, with an additional £700 million expected to close in the following months.
Asset Resilience: Unlike hotels with high staffing requirements, SA models are “lean,” making them more resilient to rising national insurance and labor costs.
Professionalisation: The “hobbyist” landlord is being replaced by branded operators (e.g., Staycity, Locke, Adagio) and institutional investors who value the sector’s 80%+ occupancy rates in major hubs like London.

Key Growth Drivers in 2026

The explosion in demand is attributed to four primary “megatrends”:

The “Bleisure” Boom: Professionals are increasingly extending business trips for leisure. Serviced apartments, offering kitchens and living spaces, are the natural choice for these 7–14 day stays.
Corporate Relocations: Savills quote corporate demand for long-term stays (>30 nights) is growing at nearly 10% annually. As global mobility returns, companies prefer “home-from-home” environments over cramped hotel rooms for relocating staff.
The Infrastructure Pipeline: Major UK projects (HS2, renewable energy sites in Scotland, and the Eden Project North in Morecambe) have created a massive requirement for “contractor accommodation”—high-quality, flexible housing for skilled workers on multi-month assignments.
Digital Nomads: The maturation of Gen Z and remote-first work culture has turned serviced apartments into de facto co-living spaces, with guests prioritizing high-speed Wi-Fi and workspace over room service.
Mortgage Availability: The gradual acceptance of Serviced Accommodation by lenders and a greater willingness to lend for serviced accommodation mortgages will help smooth the path to growth in the sector.

Emerging Regional Hotspots

While London remains the powerhouse (holding 45% of supply), 2026 is seeing a “regional rise” as investors seek higher yields outside the capital. This reflects the gradual movement of labour and centres of industry across the UK.

It isn’t just the major cities, regional towns and centres that benefit from industry or investment are quickly becoming equally attractive including areas such as Crawley, Milton Keynes and Oxford.

Location	Growth Driver	Why It’s Hot	Yield Outlook
Southampton	Maritime & Regeneration	The £1bn Mayflower Quarter project drives huge demand for long-stay contractor SA.	7.2%
Oxford	Life Sciences & Tech	Oxford North innovation district has created a critical shortage of high-end corporate stays.	6.9%
Milton Keynes	Tech & Logistics	A strategic hub for “mid-term” stays; favored by companies for its 35-minute link to London.	6.8%
Crawley	Aviation & Transit	Proximity to Gatwick ensures constant “distressed passenger” and transit staff bookings.	6.5%
Morecambe	Tourism (Eden Project)	Opening of Eden Project North (2026) has made this the UK’s top leisure SA spike.	8.0%+
Manchester	Digital & Media	Sustained professional demand in Salford Quays and the city center.	6–8%

“In 2026, the lenders who truly understand the serviced accommodation market have moved past the ‘Airbnb’ stigma. They aren’t just looking at bricks and mortar; they are looking at the strength of the corporate contracts and the operator’s ability to drive occupancy. Financing SA today is about finding that sweet spot where a robust management plan meets flexible, specialist capital -because a standard mortgage simply won’t cut it for a high-performance asset.” – David Farmer, Lime Finance Solutions

Technology and the “Guest of 2026”

The sector is undergoing a digital revolution. Modern operators are deploying:

AI-Driven Pricing: Algorithms that adjust rates in real-time based on local events and competitor occupancy. It isn’t new, but systems that were the provision of the big players can now be deployed by almost any investor.
Seamless Tech: Mobile-first guest journeys, including digital keys, remote check-ins, and smart-room integrations (controlling heat and lighting via app). The reduction in cost of implementation, and ease of implementation is becoming ever simpler.
Hybrid Models: “Aparthotels” that blend the social atmosphere of a hostel with the luxury of an apartment, catering to a younger, tech-savvy demographic who see the essentials of modern life as hygeine factors as opposed to luxuries.

The Outlook

The UK serviced accommodation market is entering a “critical inflection point.” As regulations and planning rules tighten on traditional short-term lets (like standard Airbnbs), professionalised, compliant serviced accommodation is filling the gap.

For property owners and investors, the move toward mid-term stays (2–12 weeks) is currently the “sweet spot” for maximising returns while minimising turnover costs.

By Dave Farmer

Frequently Asked Questions

Q. How does SA bypass the “Renters’ Rights Act 2026”?

A. The Renters’ Rights Act, which officially came into force on May 1, 2026, abolished fixed-term tenancies and “no-fault” Section 21 evictions for traditional residential lets.

Most serviced accommodation is let under a “Licence to Occupy” rather than an Assured Shorthold Tenancy (AST). Because guests are there for a specific purpose (business, travel, or relocation) and do not have “exclusive possession” in a residential sense, they do not gain the security of tenure that traditional tenants now enjoy. This allows landlords to regain possession of their property much more easily.

Q. What is the “28-Day VAT Rule” and how does it help?

A. If you are VAT-registered, the standard 20% rate can eat into your margins. However, the Reduced Value Rule is a major incentive for the “mid-term” corporate market:

The Rule: For continuous stays exceeding 28 days, VAT is only charged at the full 20% for the first four weeks.

From day 29 onwards, the “accommodation” element is effectively treated as having a much lower VAT value (often resulting in an effective rate of around 4%). This makes long-term corporate relocations or contractor stays significantly more profitable than nightly tourist stays.

Q. Can I get a mortgage for Serviced Accommodation?

A. Yes, but you cannot use a standard BTL mortgage. You require a Specialist Serviced Accommodation Mortgage or a Holiday Let Mortgage.

Lending Criteria: In 2026, lenders like Mortgage Lane and others are increasingly using “SA projections” rather than just “AST rental coverage” to calculate how much you can borrow.

LTVs: Expect Loan-to-Value (LTV) ratios of 65% to 75%, though some specialist products go up to 80% for experienced operators.

Q. Is SA exempt from the new 2026 EPC requirements?

A. Under the latest 2026 updates, there is a distinction between the Private Rented Sector (PRS) and short-term lets:

PRS Requirements: Traditional landlords must ensure their properties reach an EPC rating of C by 2030.

Properties used exclusively for short-term/holiday lets currently have more flexibility. However, many professional operators are upgrading anyway to attract “Green” corporate contracts from firms that mandate sustainable housing for their staff.

Q. How much more can I earn compared to a standard rental?

A. While it depends on location, the general rule in 2026 is that a well-managed SA unit can generate 2x to 3x the gross income of a standard BTL.

A property in the South East (e.g., Milton Keynes or Reading) renting for £1,400/month on an AST might achieve £120/night as an SA. At 70% occupancy, that’s over £2,500/month. Even after higher costs (cleaning, Wi-Fi, utilities), the net profit is typically 15-20% higher.

David Farmer

Over 30 years finance experience. Former credit underwriter, founder of Lime Finance Solutions in 2012. Multi Award winning business, featured in Sunday Telegraph, Parliamentary Review, Sky TV and others. Regular contributor to press and business associations. FCA Authorised, ALIBF Qualified. Specialist in Commercial Mortgages, Business Lending, Property and Development Finance.