Serviced apartments are an attractive way to invest in property. Sites like Air B&B and Booking.com are now mainstream and people are always looking for a great place to stay, where they have some independence.
That means that savvy investors are looking at the opportunity with interest. So, if you have a successful track record with HMOs this may look like a logical next step – until you apply for a mortgage.
Lenders don’t see an HMO in the same way as serviced apartments. You can show the AST income statement proving the income before they lend on that basis. A serviced apartment is a much chancier investment; they don’t have that security of income – they could be fully booked one week and empty for the rest of month.
There are mortgages available: commercial lenders have been lending on short-term lets for decades in the form of for hotels, guest houses, B&Bs, holiday lets, even kennels and catteries (they may have different clientele, but the principle is the same!) But now there’s another issue to consider if you have no track record – either of the apartment(s) you’re planning to purchase or of your experience as a serviced apartments landlord.
How can the lender be confident that you’ll be able to pay your mortgage every month, without running into difficulties? Commercial lenders need reassurance and you’ll need to give it if.
The problem appears to be insurmountable if you want a mortgage on a newly acquired property you intend to let as serviced apartments – and you have no experience as a landlord of this kind of short-term let.
So how do you take that vital step that will establish your credibility?
Another alternative is one of a handful of obscure building societies that will consider a short-term letting arrangement, even if you have no experience. But expect them to limit this to small scale projects.
If you’re determined to succeed there is always a way to reach your goal.