Owner Information

Thinking of Serviced Accommodation for your property?

 

There is a lot of hype, new stories and posts on social media about investing into serviced accommodation and being that we are an investor into the strategy having turned properties of our own into Serviced Apartments we are now wanting to share our success with you.

The great thing about serviced accommodation as a property investing strategy is that you can do it in houses, bungalows, cottages and apartments. The key is to make the property a home from home as that’s what is driving more interest in the sector from holiday makers and professionals looking for short term accommodation. Whether you’ve got a two-bed apartment or a five-bedroom house we will check the demand in the area.

In terms of the investing return, renting out a two-bedroomed apartment to holiday makers can produce an eye-catching income of between £12,000 £15,000 per annum. Larger properties can average up to £30,000 a year gross. Desirable tax breaks add to the appeal of serviced accommodation ownership which is attractive at a time when the Government is slashing tax reliefs associated with other property investments, such as buy-to-let.

If you operate under the “furnished holiday letting” rules, you can offset all expenses including full mortgage interest against the rental income. This compares with the scaling back of tax relief on buy-to-let from 2017. For example, if you were buying a cottage for £350,000 with a 75% mortgage fixed for two years at 2.85%, a landlord in the 40% tax bracket could claim £2,992.50 in tax relief, while from 2017 a buy-to-let landlord’s tax relief will be capped at £1,496.25 – a difference of nearly £1,500, which would pay for a lovely summer holiday with your family.

Running a serviced accommodation business is treated by HMRC in the same way as any trading business, so losses can be carried forward and offset against future profits. Furnished serviced accommodation also qualifies for entrepreneurs’ relief, cutting any potential capital gains tax take to 10%. Otherwise any taxable gain will be hit by an 18% deduction below the higher rate threshold of 28%. In addition if you have been actively involved in the operation of the serviced accommodation business by, for example, providing a laundry service, it may be possible to get business property tax relief. To qualify for furnished serviced accommodation (holiday-let) tax treatment, the property must be available for letting for 210 days a year and actually let for 105 of those days. If you have more than one property, occupancy can be averaged to qualify. Please note, in no way are we offering you tax advice, we recommend you speak to your own qualified property tax accountant for confirmation on your tax relief entitlements, if any.

What are you waiting for? If you would like to hugely increase your monthly income, be exempt from the new Landlord tax and lower your capital gains tax contact us now.