Serviced Accommodation vs Buy-to-Let: Which Makes More Money?

The question comes up constantly among investors looking at North West property: should I run this flat as a serviced accommodation unit, or stick with a traditional buy-to-let tenancy? The headline answer is that SA generates significantly more gross income — but the comparison is more nuanced than the revenue figure alone suggests.

Here's an honest, numbers-first look at how the two models actually compare in the North West market in 2025.

The Revenue Comparison

Take a 2-bedroom flat in Manchester city centre, currently valued at approximately £200,000. As a traditional BTL, it would achieve around £950–1,050/month in rent. That's your gross income — before management fees, maintenance, and void periods.

Run as serviced accommodation at a conservative nightly rate of £95, with 75% occupancy across the year, that same flat generates approximately £2,162/month in gross revenue. At 80% occupancy — not unusual in well-run Manchester SA — you're looking at £2,306/month.

The Cost Comparison

The raw revenue gap is large, but SA carries substantially higher operating costs. A realistic SA cost breakdown on that city centre 2-bed:

• Platform fees (Airbnb + Booking.com): approximately 3–15% of revenue depending on model (host-only vs merchant)
• Cleaning costs: £35–55 per turn, typically 20–25 turns per month at high occupancy = £700–1,375
• Management fee if outsourced: 20–25% of gross revenue = £430–540
• Utilities (internet, council tax, electricity, water): £250–350/month
• Consumables (toiletries, kitchen essentials, laundry): £80–150/month
• Maintenance and replacements: average £100–200/month annualised

On a managed SA basis (where someone else runs it), total costs can reach £1,400–1,600/month, leaving a net income of £560–760/month. Self-managed SA removes the management fee and brings net income closer to £900–1,200/month — but that requires your time and attention.

BTL costs, by contrast: letting agent fees of 8–12% of rent (£76–114/month), maintenance allowance of £50–100/month, and landlord insurance. Net income on a £950/month BTL property is typically £750–820/month with an agent.

The Honest Net Comparison

When managed SA is compared to agent-managed BTL, the net income difference often narrows to £100–300/month — a meaningful but less dramatic gap than the gross figures suggest. The SA advantage grows significantly when the property is self-managed, or when occupancy runs consistently above 80%.

Who SA Suits

• Investors who want to maximise monthly cash flow and can absorb more operational complexity
• Those with properties in high-demand SA locations (city centre, near hospitals, near major employers)
• Investors who already have — or can access — a management partner
• R2R operators for whom SA is the entire business model

Who BTL Suits

• Investors who want truly passive, predictable monthly income
• Those with properties in residential areas where SA demand is weak or inconsistent
• Portfolio investors who want to scale without operational complexity
• Investors who cannot commit time to SA management and don't have a management partner

Risk Profile Differences

BTL risk is concentrated at tenancy start and end — void periods and tenant changes. Between tenancies it's low-maintenance. SA risk is spread across the year: occupancy is never guaranteed, operational issues arise constantly (guest complaints, maintenance, platform disputes), and seasonal variation can be significant.

The Regulatory Difference

Section 24 of the Finance Act 2015 restricts mortgage interest relief for individual landlords with BTL properties — you now pay income tax on gross rent, not net profit. This significantly impacts higher-rate taxpayers. SA properties held personally or through a limited company are treated differently and often more favourably. This alone has led many investors to favour SA as a tax-efficient structure, particularly at scale.