For the last six months I've been trying to find the route into the property sector known as Serviced Accommodation.
The first problem was finding the right property that ticked my boxes, as well as being 'fit for purpose'. Having found the elusive house, I went in pursuit of the pennies to pay for it.
Most local lenders seemed totally unable to comprehend the concept of SA. Did I mean Buy to Let? No; I’d have asked about BTL if that's what I meant. Did I have the last 2 years accounts for the business? No.
But yesterday I got a breakthrough. Yes, my new broker friend could get me a mortgage for a SA purchase. The only problem is I have 'no experience' of managing an SA unit.
Is there a way around this?
Let’s put some perspective on the post. Your frustration is both evident and understandable but, as the saying goes 'walk a mile in another man shoes' and what you have been told may not seem so baffling. For anyone...
Serviced Accommodation (SA) seems to be the new HMO in terms of the property strategy everyone is talking about doing.
I can see the attraction for an investor. Like HMOs, SAs offer a superior monthly cash flow, but do I need any special mortgage for a property I am going to let out by the night or can I use a normal BTL mortgage?
You cannot run a Serviced Accommodation business with any normal type of mortgage; not legitimately anyway. If you look at any mortgage lender’s T&Cs, they state the minimum and maximum length of a tenancy agreement they will permit. For pretty much every lender, that will be a minimum of six months and a maximum of 12 months. Clearly letting for a few nights breaches these conditions.
When you commit a breach and the lender becomes aware of it they can call in the loan. Some lenders may not, but others certainly will.
I suspect that plenty of SA businesses are being run without the mortgage lenders knowledge. This...