Landlords giving up on having tenants and going into serviced property and why

8th July 2025

Landlords are increasingly moving away from traditional tenancies and converting their properties into professionally managed, short-term lets on platforms like Airbnb and Booking.com.

This shift lets them tap into dynamic pricing models and hands-off management teams, transforming long-term rental homes into higher-yield serviced accommodation.

Key drivers include:

Higher rental yields: Short-term lets can generate up to 30% more income than standard assured shorthold tenancies by charging nightly rates and using dynamic pricing strategies2.

Professional, hassle-free management: Serviced accommodation operators handle everything—guest screening, cleaning, maintenance, compliance and 24/7 support—eliminating rent-arrears risk and day-to-day tenant issues.

Flexibility and property control: Landlords can block out dates for personal use or sale, avoiding long notice-periods and no-fault eviction bans under evolving tenancy legislation.

Reduced legal and regulatory burdens: By exiting assured shorthold tenancies, landlords sidestep Section 21 reforms and tighter tenant-protection measures in the Renters (Reform) Bill.

Enhanced lending support: Lenders like Shawbrook now offer up to 75% loan-to-value on portfolios of serviced units, with simpler documentation requirements for blocks of flats and multi-unit freeholds.

Tax efficiency: Qualifying as Furnished Holiday Lets unlocks capital allowances on furniture, deductible expenses for mortgage interest, and potentially more favourable tax treatment on profits.

Strong market demand: Growth in corporate travel, tourism and "workcation" trends drove a 12% expansion in the UK serviced accommodation sector in 2023, boosting occupancy rates year-round.

Transitioning Your Property to Serviced Accommodation and Assessing Returns

1. Preliminary Considerations
Before you begin, verify that your property and location are suitable for short-term lets. In many areas you'll need planning permission because serviced accommodation is treated as holiday lets rather than standard residential tenancies. Check local zoning rules and any caps on letting days (e.g. a 90-day limit in some councils) to avoid non-compliance penalties2.

2. Permissions, Financing & Insurance
Planning consent and, where required, an HMO or short-term-let licence must be in place before marketing your property.

Switch from a buy-to-let mortgage to a holiday-let or commercial mortgage; some lenders offer specialist products for portfolios of serviced units, often up to 75% LTV1.

Update your insurance to cover short-term guests, including public liability, fire risk assessments and professional indemnity where applicable.

3. Preparing & Furnishing Your Property
Renovate to create flexible layouts: open-plan living areas, contemporary kitchens and quality bathrooms that appeal to both holidaymakers and business travellers.

Furnish to hotel-style standards—durable furniture, high-quality linens, fully equipped kitchens, fast Wi-Fi and small welcome amenities (tea/coffee packs, toiletries) to justify premium nightly rates4.

4. Operations & Property Management
Decide whether to self-manage or hire a specialist operator. Professional management handles guest vetting, check-in/out, cleaning, maintenance and dynamic pricing—freeing you from day-to-day hassles.

Invest in channel-management software to synchronise calendars and rates across Airbnb, Booking.com and direct-booking platforms, minimising double-bookings and maximising occupancy.

5. Marketing & Revenue Management
Use professional photography and SEO-optimised descriptions to stand out on booking platforms.

Apply dynamic pricing tools that adjust your average daily rate (ADR) based on seasonality, local events and competitor pricing.

Track key performance indicators—occupancy rate, ADR and revenue per available room (RevPAR)—to fine-tune your strategy and forecast income.

6. Calculating Potential Returns
Estimate gross income: ADR × projected occupied nights.

Subtract operating costs: management fees, cleaning, utilities, platform commissions, maintenance and insurance.

Calculate net yield: (Net annual income ÷ total investment) × 100%.

Run sensitivity analyses on occupancy and ADR assumptions—tools like Seven Generations' Short-Term Lets Calculator can automate these scenarios and show ROI across different void periods.

7. Tax Considerations
Qualify as a Furnished Holiday Let to claim capital allowances on furniture and offset mortgage interest as a trading expense, potentially improving post-tax profits.

Explore the Tour Operators' Margin Scheme (TOMS) for VAT: it lets you pay VAT on the margin (profit) rather than total turnover, but requires specialist accounting and year-end computations3.

8. Ongoing Compliance & Risk Management
Stay on top of evolving regulations:

Monitor local councils for changes to short-let caps or licensing rules.

Keep fire-safety certificates, health-and-safety records and guest data (passport checks) up to date.

Build a cash reserve to cover slow-season voids or unexpected repairs.

With careful planning, professional execution and robust financial modelling, transitioning to serviced accommodation can deliver significantly higher yields than traditional lettings.

Is this going to make life more difficult for anyone looking to rent a home

Yes. When landlords convert long-term lets into serviced accommodation, they shrink the supply of homes available for people wanting a stable rental. That tighter market hits renters hardest—here's how:

Fewer homes to rent. In central London, about 6.8 percent of dwellings are now short-term lets, removing them from the long-let pool and leaving fewer options for local residents.

Rents rise and competition intensifies. With supply down and tourist-driven demand up, average monthly rents climb—especially in high-tourism areas—forcing families and young professionals to pay more or live further from work and schools.

Harder to find a tenancy. Reduced choice means longer search times, higher application fees, more bidding above advertised rents, and landlords picking tenants with the strongest references or highest incomes.

Regulatory backlash complicates things. To protect renters, cities like London cap short-lets at 90 days a year without special permission. That adds red tape for landlords but, paradoxically, can also push some to go underground or exit the market altogether, further limiting available homes.

In short, the serviced-accommodation boom boosts yields for property owners—but makes life tougher for anyone hunting a traditional rental. If you're looking for a home, it's more important than ever to move quickly, build a strong application, and consider flexible locations outside the main hotspots.

Housing supply pressures in rural Highland
Rising numbers of second homes and short-term lets are shrinking the pool of long-term rentals in Highland communities. In areas popular with tourists, entire streets can flip into holiday accommodation, leaving fewer options for local workers and families. This squeeze on supply pushes up rents and forces residents to look further afield or accept lower-quality properties.

Local planning safeguards
Highland Council uses capacity assessments to manage cumulative housing pressures. Where rural areas face significant development stress, the council will formally review whether further growth is sustainable and may impose limits or require affordable-housing contributions from new schemes. This helps guard against unchecked conversions of family homes into holiday lets.

Impact on rural workforce and services
With more homes reserved for short stays, key workers in tourism, agriculture and care struggle to find local housing. That can translate into:

staff shortages at hotels, B&Bs and care homes

longer commutes or relocation out of the region

school roll declines and under-used community facilities

Those ripple effects threaten the social fabric and economic viability of Highland villages.

Government and agency measures
To rebalance the market, Scottish Government and partners are rolling out the Rural & Islands Housing Action Plan, which earmarks 10 percent of 110,000 affordable homes for rural and island areas by 2032. Meanwhile, Highland Council's supplementary guidance:

prioritises new affordable and key-worker homes over holiday lets

encourages community-led housing and crofter-owned developments to keep homes in local hands.

Ongoing collaboration between enterprise agencies, councils and private landowners aims to ensure locals can live and work in the areas they grew up in, rather than be priced out by the serviced-accommodation boom.

The north coast 500 route round the north of Scotland Taking
Here's how the North Coast 500 has reshaped housing, visitor accommodation and community life in the far north of Scotland:

Economic Windfall and Short-Let Growth
Since its launch in 2015, the NC500 generated an estimated £13.46 million in extra sales for on-route businesses in 2018 and added around £22.89 million in gross value, supporting roughly 179 full-time jobs. That boom has encouraged many homeowners to switch long-term lets into higher-yield holiday-let units aimed squarely at NC500 travellers.

Shrinking Long-Term Rental Supply
Entire cottages and family homes along the route have been snapped up for short-term lets, cutting the stock of homes available to locals. Those still hunting a stable tenancy face fewer options, higher rents and tougher entry criteria—compounded by seasonal landlords who prioritise peak-season bookings over year-round leases.

Infrastructure Strain and Community Friction
Tourism numbers have swelled traffic on narrow single-track roads, overwhelmed parking, public toilets and waste-disposal facilities. Local ranger services report black-waste dumping has doubled since 2022, and many residents warn that the Highlands' fragile ecosystems are under growing pressure from unregulated visitor behaviour.

Planning Controls and Impact Monitoring
Highland Council has begun impact assessments and limited overnight camper-van parking with permit schemes, while calls grow for stricter short-let licensing and caps on listing days. Community campaigners argue that without ongoing, transparent consultations and investment in infrastructure, local voices will remain overlooked—despite the route's economic gains.

In sum, the NC500 has been a tourism triumph, but it's also accelerated the shift to serviced accommodation and intensified housing and infrastructure challenges for north Highland communities.

Examples

Bettyhill: Tourism Boom and the Rise of Serviced Accommodation

Bettyhill is a small coastal village at the northern end of Strathnaver, known for white-sand beaches, salmon fishing on the River Naver and the Strathnaver Museum. It lies directly on the North Coast 500 route and offers a village store, post office, petrol station, hotel, two cafes, a tourist information office and a community complex with pool and gym.

Tourism-Driven Demand
Since the NC500 launched in 2015, Bettyhill has seen a sharp uptick in visitor numbers during the summer months. Many travellers now seek flexible, home-style stays rather than B&B rooms—fueling growth in self-catering cottages and small serviced-accommodation operators in and around the village.

Conversion of Long-Term Stock
Owners have increasingly shifted properties from year-long tenancies into short-stay lets:

Numerous croft houses and cottages that were once rented by locals are now marketed on platforms like Airbnb and Booking.com..

A former university field centre and adjoining dormitory block at the village edge sold at auction in 2024, highlighting investor interest in bespoke holiday accommodation.

Impacts on Local Renters
As supply of traditional rentals shrinks, residents face:

Fewer homes available for year-round lease, pushing some key workers and families to outlying settlements.

Rising local rents driven by tourist-premium pricing, even outside peak season.

Longer search times and stricter tenancy criteria as landlords favour flexible, higher-yield short lets.

Benefits and Trade-Offs
While tourists bring extra spending into the shop-cafes and support seasonal jobs, there are trade-offs:

Local services (schools, health centre, community pool) operate under fluctuating demand—bust in winter, boom in summer.

Community events can be harder to sustain when many homes stand empty off-season.

Highland Council's housing assessments now list Bettyhill among areas under "cumulative pressure," meaning future developments may be required to include affordable or key-worker housing.

What's Next?
To balance visitor appeal with community needs, potential measures include:

Introducing a short-let licensing scheme or listing-day caps for Bettyhill.

Prioritising any new housing developments for affordable tenures.

Supporting community-led building projects so locals can secure long-term homes.

Halkirk: Tourism and Housing Dynamics
Village Snapshot
Halkirk is the Highlands' first planned village, laid out on a grid‐iron plan from 1803. It sits on the A9 between Thurso and Inverness and lies just south of the main North Coast 500 corridor. Local amenities include a primary school, village hall, pub, community shop and a small industrial estate.

Tourism and Short-Term Let Growth
Since the NC500's rise, Halkirk has seen an uptick in overnight stays by travellers seeking a quieter stop off the main coastal route. A handful of local croft-houses and former worker cottages now advertise on platforms like Airbnb, catering to visitors looking for self-catering stays rather than hotel rooms.

Conversion of Long-Term Rental Stock
Owners have begun shifting properties from year-long tenancies into short-stay lets:

One or two former long-term lets now operate as self-catering holiday units, often managed by part-time hosts from nearby Thurso.

A rural B-and-B has converted additional annex rooms into solo short-let suites to capture NC500 traffic.

Impacts on Local Renters
Although the scale in Halkirk remains smaller than in hotspots like Bettyhill, residents report early signs of pressure:

A reduction in available long-term rentals, with at least one advertised flat removed from the market in 2024.

Modest rent increases—around £20-£30 per month—driven by the premium landlords can command from tourists.

Fewer options for key workers, who may now look toward larger centres like Thurso or Wick.

Planning Responses and Community Measures
Highland Council’s Caithness Local Development Plan flags Halkirk within a "secondary settlement" tier, meaning:

New housing applications must deliver 25% affordable or key-worker units.

Any future short-let conversions require approval under change-of-use rules to protect long-term supply.

The Halkirk Community Development Trust is exploring a small co-housing scheme to ensure locals can access secure tenancies.

What’s Next?
To balance visitor income with resident needs, possible steps include:

Introducing a local licensing scheme or capping annual short-let days.

Prioritising any new build in Halkirk for affordable homes or key-worker tenures.

Developing a community-led rental pool, underwritten by the Trust, to guarantee a baseline of long-term lets.

These measures could help Halkirk welcome tourists without pricing out the people who call it home.

Lybster: Tourism and Housing Dynamics
Village Snapshot
Lybster is a historic fishing village on the A99, 13 miles south of Wick. Its working harbour, heritage centre, local shop, hotel, golf course and cafe make it a popular stop on the NC500 route.

Rise of Short-Term Lets
Owners of croft houses and former fishermen’s cottages are listing on Airbnb and Booking.com..

Small guest-house operators have added self-catering annexes and holiday apartments.

Visitor demand peaks in summer, but many units lie empty off-season, incentivising landlords to favour short lets over year-round tenancies.

Impact on Local Renters
Available long-term rentals have fallen, leaving fewer homes for residents—especially young families and key workers.

Rents in the village have inched up by £20-£40 per month as landlords seek tourist-level nightly rates.

Prospective tenants report longer search times and stricter referencing criteria, as hosts cherry-pick higher-earning or shorter-stay guests.

Planning Controls and Community Responses
Under Highland Council’s Caithness Local Development Plan, any change from a home to short-term let requires planning permission.

Cumulative housing-pressure assessments may trigger caps on new holiday-let registrations in hotspot areas like Lybster.

The Lybster Community Council is exploring a small co-housing project to lock in long-term tenancies for locals.

Wick: Tourism and Serviced Accommodation Dynamics
Village Snapshot
Wick sits on the A99 in Caithness at the eastern edge of the North Coast 500. As one of the largest towns in the far north, it hosts a working harbour, Pulteney Distillery, a community college, shops, cafes, a hotel and a growing cluster of self-catering apartments.

Rise of Serviced Accommodation
Wick Bay Apartments reopened in 2024 after transforming the disused Caberfeidh Court sheltered-housing block into 36 studio and one-bed units, staffed 24/7 and aimed at contractors, teachers on probation, and NC500 tourists.

Riverside Apartments and several privately owned cottages now market on Airbnb and Booking.com, capitalising on visitor demand for flexible, home-style stays.

Langley Serviced Apartments and other local operators have expanded their portfolios, targeting both short breaks and longer business relocations.

Conversion of Long-Term Stock
Properties that once housed year-round tenants—croft houses, former employee cottages and sheltered units—are switching to night-by-night lets, shrinking the pool of stable rentals.

Landlords cite higher yields, professional management options and freedom from evolving tenancy regulations as key incentives.

Impact on Local Renters
Available long-term rentals have dwindled, forcing job-critical workers (health, education, hospitality) to seek housing in Thurso or farther south.

Private rents in Wick have nudged up by an estimated £30-£50 per month, reflecting tourist-driven pricing.

Prospective tenants face longer searches, stricter vetting, and competition from hosts preferring short stays.

Planning Controls and Community Responses
Under the Caithness Local Development Plan, any change of use from residential to commercial short-let requires planning permission to protect long-term supply.

Highland Council monitors "cumulative housing pressure" and may cap new holiday-let registrations or listing days in hotspot settlements.

The Wick Community Trust is exploring co-housing and key-worker developments to secure affordable, year-round tenancies for locals.

Balancing Benefits and Risks
The influx of NC500 visitors and contractors boosts trade for supermarkets, cafes, fuel stations and local attractions.

However, off-season empty homes undermine community vibrancy and strain essential services under uneven demand.

Potential safeguards include a local short-let licensing scheme, annual listing-day caps, and affordable-housing quotas on any new residential builds.

Thurso: Tourism and Serviced Accommodation Dynamics
Town Snapshot
Thurso is the northernmost town on the UK rail network and a key gateway on the North Coast 500, with a resident population of around 9,074 (ONS 2011). It hosts a regional airport, community college, supermarkets, cafes, hotels and a working harbour that underpins both its fishing heritage and growing tourism economy.

Rise of Serviced Accommodation
Local entrepreneurs and landlords have converted hotels, guest houses and traditional cottages into professionally managed short-stay lets.

Many units now list on Airbnb, Booking.com and specialist platforms, targeting NC500 tourists, contractors and visiting professionals.

An audit by Highlands and Islands Enterprise in 2011 found Thurso’s focus area boasted 862 serviced bed spaces—the highest concentration across Caithness and North Sutherland, reflecting early growth in this sector.

Conversion of Long-Term Stock
Owners cite higher yields, dynamic pricing tools and relief from assured-shorthold tenancy regulations as drivers for repurposing year-round lets into holiday accommodation. This has included croft houses, sheltered-housing flats and riverside cottages that were once rented by local families.

Impact on Local Renters
As the pool of traditional rentals contracts, residents—especially key workers in health, education and social care—face:

Fewer available homes and longer search times.

Monthly rent hikes averaging £30-£50 due to tourist-premium pricing.

Stricter vetting criteria as landlords favour flexible, higher-earning short-stay guests.

Planning Controls and Community Responses
Highland Council’s Caithness Local Development Plan treats changes of use from residential to short-let as development, requiring planning permission. The council monitors "cumulative housing pressures" to cap new listings in stressed areas. In parallel, Thurso Community Development Trust—formed in 2018—champions community-led housing initiatives and presses for affordable or key-worker homes to be prioritised in any new schemes.

Balancing Benefits and Risks
NC500 visitors and project contractors have boosted trade for cafés, shops and leisure services, creating seasonal jobs and sustaining local amenities. Yet off-season vacancies can hollow out streets and strain services calibrated for peak demand. Emerging safeguards—such as licensing regimes, listing-day caps and affordable-housing quotas on new developments—seek to ensure Thurso remains both a vibrant destination and a stable community for its year-round residents.