Why We Choose to Avoid Rent to Serviced Accommodation (R2SA)

As a letting agent, we carefully evaluate various property investment strategies, and one that we choose to steer clear of is Rent to Serviced Accommodation (R2SA). While R2SA has gained popularity among landlords and property entrepreneurs, we believe there are compelling reasons why this may not align with our business model.

1. Lack of Long-Term Stability

One of the primary reasons we opt for traditional buy-to-let properties with assured shorthold tenancies (ASTs) is the long-term stability they provide. R2SA typically involves shorter contracts of 3, 4, or 5 years, and this lack of extended commitment can lead to unpredictable income streams. Traditional rentals offer the security of long-term tenancy agreements, ensuring a steady and reliable cash flow for our landlords.

2. Property Maintenance Challenges

While R2SA properties may boast high-quality presentations due to short-term rentals, the constant turnover of guests poses significant challenges in terms of maintenance. Unlike long-term tenancies where wear and tear occur gradually, R2SA properties require regular attention to scuffs, marks, and other issues. This ongoing maintenance can be resource-intensive, potentially increasing operational costs over time.

3. Limited Control Over Property Management

In a traditional letting scenario, landlords have greater control over property management. However, in an R2SA arrangement, the property is often managed by the operator, introducing an additional layer of complexity. This can result in a diminished ability to promptly address issues or ensure the property meets our stringent standards.

4. Contractual Complexity

R2SA involves specific contracts such as management agreements or commercial leases. Selecting the wrong contract can lead to unforeseen problems, especially when dealing with a property that has a mortgage. The potential for legal complications increases if standard long-term tenancy agreements are mistakenly used. We prioritize simplicity and clarity in our contractual agreements to avoid such pitfalls.

5. Insurance Considerations

Ensuring the right insurance coverage is crucial in any property investment. R2SA demands professional indemnity and public liability insurance, adding another layer of complexity. While we can recommend suitable insurers, navigating these additional requirements can be time-consuming and may not align with our streamlined approach to property management.

6. Focus on Customer Service

R2SA operators must treat their venture as a service business, prioritizing excellent customer service to maintain high occupancy rates. This differs significantly from our traditional letting approach, where the focus is on long-term tenant satisfaction. The short-stay nature of R2SA demands immediate attention to issues, creating a dynamic that may not be suitable for our operational preferences.

In conclusion, while R2SA can be a profitable venture for some, we, as letting agents, prioritise the stability, control, and simplicity offered by traditional long-term lettings. Our commitment to providing reliable and efficient property management aligns better with the conventional model, ensuring a positive and consistent experience for both landlords and tenants.