Serviced accommodation has moved from a niche investment strategy to a mainstream alternative for landlords seeking higher returns. Offering hotel-style amenities and operating on a short-term basis, these properties appeal to both domestic travellers and international visitors.

However, the financing process in 2025 is far from straightforward. Lenders view serviced accommodation through a different lens than standard buy-to-let properties, and that makes preparation, presentation, and lender choice critical to success.

Why Serviced Accommodation Requires a Different Finance Approach

The first thing to understand is that serviced accommodation is seen by lenders not just as property investment, but as a trading business. Unlike a traditional buy-to-let — where rental income is based on an Assured Shorthold Tenancy (AST) with predictable monthly payments — serviced accommodation income fluctuates depending on seasonality, location demand, and operator skill.

Because of this, lenders carry out a more detailed assessment. In some cases, they will underwrite against potential AST income rather than your actual serviced accommodation earnings, which can significantly reduce borrowing capacity. Others will lend against proven short-term let income, but this typically requires a track record of at least twelve months with clear evidence of occupancy rates, nightly rates, and operating expenses.

We’ve explored similar nuances in our article on UK Buy-to-Let Strategies in 2025, where landlord strategy choice can directly impact how lenders approach the case. Serviced accommodation takes this one step further because the property’s performance as a business is under the microscope.

Lender Attitudes in 2025

In the current market, specialist lenders are still active in the serviced accommodation space, but mainstream banks remain cautious. There is no “one-size-fits-all” approach — some lenders will be guided entirely by the property’s alternative use as a long-term rental, while others are happy to consider the actual short-term income figures.

Lenders with an appetite for this type of property tend to focus on three main factors: the borrower’s experience in operating short-term lets, the strength of the location, and the stability of projected income. Properties in prime tourist areas, city centres, or near major business hubs are often favoured because demand is more consistent. Remote locations can still attract lending interest, but only if there is a strong case for year-round bookings.

This mirrors the lender caution we’ve covered in blogs such as Can You Get a Mortgage on a Thatched Cottage?, where property type dictates underwriting appetite. In both cases, lenders want reassurance that the property can hold value and generate reliable income in different scenarios.

Borrower Strategies for a Stronger Application

Success in financing serviced accommodation often comes down to how well the case is packaged. Borrowers with a clear, well-documented business plan and strong financial records stand out. Ideally, you should operate the property for at least a year before refinancing or seeking long-term finance, so you can provide lenders with booking schedules, bank statements, and profit and loss accounts that show stability.

Keeping business income and expenses separate from personal finances is essential. A dedicated business account for the property not only makes your bookkeeping easier but also gives lenders clean, auditable evidence of performance.

Some operators choose to structure ownership through a limited company, which can open up additional lender options. We cover the pros and cons of this in Limited Company Mortgages Explained, and the same principles apply here — particularly if you plan to scale your serviced accommodation portfolio.

A 2025 Case Example

Consider the example of a client who approached us in early 2025 with a two-bedroom apartment in a busy coastal town. The property had been purchased eighteen months earlier using a bridging loan while it underwent refurbishment and conversion into serviced accommodation.

Over the first year of trading, the apartment achieved an average occupancy of 78%, with peak summer rates delivering exceptional returns. By presenting a full set of trading accounts, monthly booking breakdowns, and proof of repeat guest bookings, we were able to approach specialist lenders who considered the actual income rather than the AST equivalent.

The result was a long-term mortgage at a competitive rate that allowed the client to repay the bridging facility and release £60,000 in equity for a second serviced accommodation purchase. This outcome would not have been possible without a clear financial track record and a well-structured application — a reminder that timing and preparation can make a dramatic difference to lending outcomes.

Refinancing Opportunities and Timing

Refinancing serviced accommodation in 2025 can be a way to unlock equity for expansion, reduce interest costs, or move from short-term bridging to a more stable product. Choosing the right moment is key. Approaching lenders after a strong trading period — typically just after peak season — can help maximise the valuation and borrowing potential.

In our blog on Using Equity Release for Portfolio Growth, we highlight how timing can influence borrowing capacity. The same applies here: lenders are more inclined to offer higher loan amounts when they see evidence of sustained high performance.

Risks Lenders Will Want Addressed

While the serviced accommodation model can be highly profitable, it’s not without challenges. Seasonal fluctuations in occupancy can make income unpredictable, and local authority regulations around short-term lets are tightening in some areas. Operational costs — including cleaning, maintenance, utilities, and management fees — are also higher than for standard rentals, and lenders will expect to see that these have been accounted for in your cash flow forecasts.

Demonstrating that you have contingency plans in place, whether through flexible pricing strategies or diversified booking platforms, can reassure lenders and set your application apart.

How Willow Private Finance Can Help

At Willow Private Finance, we specialise in navigating complex lending scenarios. For serviced accommodation operators, we understand which lenders are active in this space, how to present trading performance effectively, and how to position your application for the best possible terms. Whether you are buying your first unit, refinancing an established property, or restructuring your borrowing for growth, we can help you secure the right finance solution.

Frequently Asked Questions

What makes serviced accommodation different from standard buy-to-let in lenders’ eyes?
Lenders view serviced accommodation as a hybrid of property investment and trading business. Because revenue fluctuates (seasonality, occupancy, nightly rates), some lenders underwrite based on equivalent Assured Shorthold Tenancy (AST) income rather than actual short-term let income. To consider real performance, you’ll generally need at least 12 months of trading records, detailed booking data, and proof of net revenue after expenses. Willow Private Finance

Which types of lenders are willing to finance serviced accommodation in 2025?
Mainstream banks remain cautious. The appetite lies mainly with specialist lenders experienced in hospitality or alternative-use properties, and private banks open to bespoke structures. These lenders tend to focus on: the borrower’s operational track record, location strength, and income stability. Willow Private Finance

What key borrower attributes improve the chances of approval?

• A well-documented business plan with forecasts, occupancy rates, and expense lines
• At least a year of actual trading performance with booking histories, accounts, and revenue statements
• Separating the serviced-accommodation business from personal finances (i.e. dedicated business accounts)
• In many cases, operating under a limited company structure, which some lenders prefer for clarity and liability reasons Willow Private Finance

When is the best time to refinance or move from a bridging loan into a long-term mortgage?
After a strong trading period—ideally just after peak season—when performance metrics are most favourable. This timing improves valuation and strengthens your borrowing capacity. Many operators refinance soon after demonstrating stable occupancy and revenue to unlock equity or convert temporary finance. Willow Private Finance



What risks do lenders flag in serviced accommodation proposals?

• Revenue volatility and seasonality
• Local authority regulations restricting short-term lets
• High operational costs (cleaning, maintenance, utilities, management)
• Over-reliance on a single booking platform or narrow demand base
• Insufficient margin or contingency planning in your projections Willow Private Finance

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