76% of Landlords Are Refinancing to Expand - But Are They Deploying Capital Into the Wrong Model?

A Wave of Capital Is About to Hit the London Property Market

According to recent data from Property Wire, a striking 76% of buy-to-let landlords are planning to refinance their existing portfolios to acquire more property. That is an enormous amount of London equity about to be redeployed, and it tells us something important: landlords are still bullish on property as an asset class.

But here is the question nobody seems to be asking. Refinancing to expand is a sound strategy in principle, yet expanding into what, exactly? If three quarters of landlords are about to pour released equity back into the traditional assured shorthold tenancy (AST) model, many of them could be locking capital into an operating model that is delivering thinner margins every single year.

Let's unpack why, and explore where that capital could be working significantly harder.

The Traditional BTL Model Is Under Serious Pressure

For years, the buy-to-let playbook was simple. Purchase a property, find a tenant on a 12-month AST, collect rent, and repeat. It worked beautifully when mortgage interest was fully tax-deductible, regulatory costs were minimal, and tenant demand outstripped supply.

In 2026, the landscape looks very different.

Rising Compliance Costs

The regulatory burden on landlords has grown substantially. EPC upgrades, electrical safety certificates, gas safety checks, smoke and carbon monoxide alarm regulations, deposit protection, selective licensing in many London boroughs: these costs add up quickly. For a landlord with a portfolio of five or ten properties, compliance spending can eat thousands of pounds per year before a single maintenance call comes in.

The Renters' Rights Act

The Renters' Rights Act has fundamentally changed the landlord-tenant relationship. The removal of Section 21 "no-fault" evictions means landlords now face longer, more complex processes to regain possession of their properties. While tenant protections are important, the practical effect for investors is reduced flexibility and increased risk. A problem tenancy that once took two months to resolve can now stretch considerably longer, with legal costs mounting throughout.

Mortgage Rate Pressures on Margins

Even with rates stabilising somewhat, the days of sub-2% BTL mortgages feel like ancient history. Many landlords refinancing today are locking in at rates that, combined with the Section 24 tax changes that prevent full mortgage interest relief, leave net yields uncomfortably thin. On a typical London flat with a gross yield of 4-5%, the net return after tax, mortgage costs, management fees, maintenance, and compliance can slip below 2%. That is a lot of effort and risk for a return that barely outpaces a savings account.

So Where Should Released Capital Go?

This is where the conversation gets genuinely interesting. The same London property that delivers a modest 4-5% gross yield as a long let can generate significantly more when operated as serviced accommodation.

What Is Serviced Accommodation?

Serviced accommodation refers to fully furnished properties let on a short-term basis, typically through platforms like Airbnb, Booking.com, and direct booking channels. Think of it as the space between a hotel and a traditional rental. Guests book for a few nights, a week, or sometimes a few months. The property is professionally managed, cleaned between stays, and priced dynamically based on demand.

In London, where tourism, business travel, and relocation demand remain consistently strong, well-managed serviced accommodation units routinely generate gross yields of 10-15%, sometimes more in prime locations.

How the Numbers Work

Let's take a concrete example. A two-bedroom flat in Zone 2 might generate £2,200 per month as a traditional long let, or roughly £26,400 per year before costs. That same property, operated as a serviced accommodation unit with professional management, dynamic pricing, and strong occupancy, could realistically generate £40,000 to £55,000 in gross revenue annually.

Yes, operating costs are higher. You need professional cleaning, linen, guest communication, platform management, and regular restocking. But even after those costs, the net return per pound of equity invested is substantially higher than the traditional AST model. This is precisely why landlords working with companies like Airhosts are seeing their London properties outperform their long-let equivalents by a wide margin.

The Pros

• Higher yields. The revenue potential per property is significantly greater.
• Flexibility. You retain the ability to use the property yourself, accommodate family, or pivot back to long-let if your circumstances change.
• No Section 21 headaches. Short-term guests check out on their departure date. There are no lengthy eviction proceedings to worry about.
• Dynamic pricing. Revenue can be optimised around seasonal demand, local events, and market conditions in real time.

The Cons and Pitfalls to Watch

Serviced accommodation is not a guaranteed win, and it is important to go in with clear expectations.

• The 90-day rule. In London, most properties are limited to 90 nights of short-term letting per calendar year unless you obtain planning permission for a change of use. This is a critical consideration, and any serious operator needs a clear strategy to navigate it. Some landlords secure planning consent; others blend short-term lets with medium-term stays of 90 days or more to maintain year-round income.
• Operational complexity. Managing guest turnover, cleaning schedules, pricing, reviews, and platform listings is genuinely demanding. Doing it yourself across multiple properties is a recipe for burnout.
• Setup costs. Furnishing and equipping a property to a high standard requires upfront investment, though this is typically recouped within the first few months of operation.
• Regulation. London's short-term let regulations may evolve further, so staying compliant and informed is essential.

The single biggest pitfall? Trying to do it all yourself. The landlords who struggle with serviced accommodation are almost always the ones who underestimate the operational demands and try to self-manage.

The Case for Professional Management

This is where the comparison becomes stark. Expanding a traditional BTL portfolio means taking on more tenants, more compliance obligations, more maintenance calls, and more regulatory risk, all for steadily diminishing returns. It scales your workload at least as fast as it scales your income.

Serviced accommodation, managed professionally, flips that equation. Your income scales while your personal involvement stays minimal. A company like Airhosts handles everything from listing optimisation and dynamic pricing to guest communication, cleaning coordination, and regulatory compliance. You own the asset. You receive the income. The operational complexity sits with a team that does this every single day across London.

For a landlord sitting on released equity from a refinance, the question becomes straightforward. Do you want to put that capital into another long-let property yielding 2% net after all costs and headaches, or into a professionally managed serviced accommodation unit generating meaningfully higher returns with less personal involvement?

The Smartest Use of Your Released Equity

The 76% of landlords planning to refinance are making a sensible first move. Property remains one of the strongest asset classes for long-term wealth building. But the vehicle matters as much as the asset. Pouring more capital into a traditional model that is being squeezed from every direction, regulatory, fiscal, and operational, is not the only path forward.

Serviced accommodation, managed by a specialist team that understands London's unique market dynamics, offers a compelling alternative. Higher yields, greater flexibility, and a genuinely hands-off ownership experience.

If you are refinancing, expanding, or simply wondering whether your current portfolio is working hard enough, talk to Airhosts. We help London landlords unlock the full revenue potential of their properties, without the operational headache. Get in touch today and find out exactly what your property could earn as a professionally managed short-term let.