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  • Writer's pictureRobin Lawson

Comparing Serviced Accommodation with Traditional Buy-to-Let Investments in Newcastle and North East England

Updated: 2 days ago

Investing in property is a popular choice for many and, in Newcastle and North East England, the decision is ofen whether to invest in serviced accommodation or traditional buy-to-let properties. Each option has its own set of advantages and disadvantages, and understanding these can help investors make informed decisions.


Angel of the North sculpture in Newcastle, symbolising the cultural heritage of North East England and attracting visitors to invest in serviced accommodation.
Angel of the North: This iconic sculpture in Gateshead highlights the cultural heritage of North East England, boosting the demand for serviced accommodation in the area.

Invest in Serviced Accommodation


Pros

  1. Higher Income Potential: When you invest in serviced accommodation, you can generate significantly higher income compared to traditional rentals. The nightly rate for serviced apartments is typically higher, and with strong occupancy rates, the returns can be impressive.

  2. Flexibility: Owners of serviced apartments have the flexibility to use the property themselves during periods when it’s not booked. This offers a level of personal benefit that traditional rentals don’t provide.

  3. Tax Benefits: There are potential tax advantages associated with furnished holiday lets, such as capital allowances on furniture and fixtures, which are not available for traditional rentals. This makes it financially appealing to invest in serviced accommodation.

  4. Market Demand: Newcastle, with its vibrant cultural scene and growing business district, attracts tourists and corporate clients alike. The demand for short-term stays in serviced apartments is strong, particularly in city centres and popular areas in North East England.


Cons

  1. Management Intensive: Running a serviced accommodation requires more hands-on management, including regular cleaning, maintenance, and guest communication. It can be time-consuming and may necessitate hiring a management company, which reduces profits.

  2. Variable Income: Income from serviced accommodation can be unpredictable, fluctuating with seasons and market demand. High occupancy in peak seasons may be offset by low occupancy during off-peak times.

  3. Regulations and Compliance: There are stricter regulations and compliance requirements for serviced accommodations, particularly in terms of health and safety, which can add to the operational burden.

  4. Higher Operational Costs: The costs associated with maintaining serviced apartments, such as utilities, cleaning services, and furnishings, are generally higher than those for traditional rentals.


Traditional Buy-to-Let Investments


Pros

  1. Stable Income: Traditional buy-to-let investments typically offer more stable and predictable income. Tenants usually sign long-term leases, providing a steady rental income, unlike the variable income associated with serviced accommodation.

  2. Lower Management Requirements: Managing a traditional rental property is generally less demanding. Once a tenant is in place, the day-to-day management is minimal compared to serviced accommodation.

  3. Simplicity: Traditional rentals are straightforward, with fewer regulations and compliance requirements compared to serviced accommodation.

  4. Tenant Responsibility: Tenants in traditional rentals are often responsible for utilities and minor maintenance, reducing the operational burden on the landlord.


Cons

  1. Lower Income Potential: The rental income from traditional buy-to-let properties is usually lower than what can be achieved from serviced accommodation, especially in prime areas of Newcastle and North East England.

  2. Less Flexibility: Once a tenant is in place, landlords have less flexibility to use the property themselves, unlike those who invest in serviced accommodation.

  3. Void Periods: While generally less volatile, traditional rentals can still experience void periods between tenancies, leading to potential income loss.

  4. Depreciation: Over time, traditional rental properties can experience wear and tear, and landlords are responsible for major repairs and renovations.


Conclusion


Deciding whether to invest in serviced accommodation or traditional buy-to-let properties in Newcastle and North East England depends on your investment goals, risk tolerance, and willingness to manage the property. Serviced apartments offer higher income potential and flexibility but require more hands-on management and face income variability. Traditional rentals provide stable income and lower management demands but typically yield lower returns. Evaluating these factors will help you make a more informed investment decision tailored to your needs.


By understanding the pros and cons of each investment type, you can better navigate the property market in Newcastle and North East England. Whether you choose to invest in serviced accommodation or traditional buy-to-let, aligning your strategy with your investment objectives is key to success.


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Frequently Asked Questions

What are the main advantages of investing in serviced accommodation in Newcastle and North East England?

What challenges should I be aware of when investing in serviced accommodation?

How does traditional buy-to-let investment compare to serviced accommodation?

What factors should I consider when choosing between serviced accommodation and traditional buy-to-let properties?

Are there specific tax benefits associated with serviced accommodation investments?


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