Rent Freeze Fears and the Renters' Rights Act: Why London Landlords Are Switching to Serviced Accommodation

The Rent Ceiling Just Got Very Real

If you're a London buy-to-let landlord, the last week of April 2026 probably felt like a punch to the gut. The Guardian reported on 28 April that shares in major BTL mortgage lenders crashed across the FTSE 250 after speculation that Chancellor Rachel Reeves was considering a rent freeze. Within hours, billions were wiped off lender valuations, and landlord confidence took yet another hit.

Whether or not a full rent freeze materialises, the direction of travel is unmistakable. The Renters' Rights Act, which came into force on 1 May, now limits landlords to a single rent increase per year, and that increase must be justifiable against market evidence. Tenants can challenge above-market rises through a tribunal. For landlords who have relied on steady annual uplifts to keep pace with rising mortgage rates, insurance premiums, and maintenance costs, this is a serious squeeze on real-terms income.

So what's the alternative? Increasingly, London landlords are looking at serviced accommodation and corporate lets as a way to set pricing dynamically, outside the constraints of an Assured Shorthold Tenancy. Let's dig into how this model works, what you need to know, and where the pitfalls lie.

What Is the Serviced Accommodation Model?

Serviced accommodation sits in a different legal and commercial category to a traditional residential let. Instead of signing a tenant into a 12-month AST, you offer a furnished property on a nightly, weekly, or monthly basis. Think of it as operating more like a boutique hotel than a rental property.

Bookings typically come through platforms like Airbnb, Booking.com, and corporate housing portals. Rates are set dynamically based on demand, seasonality, local events, and market conditions. There is no AST, no rent cap, and no once-a-year restriction on adjusting your pricing. You can change your rate every single night if the market justifies it.

For London properties in high-demand areas, this model can generate 30% to 80% more gross revenue than a traditional long let, according to industry benchmarks. That premium reflects the higher nightly rates, the flexibility to capture peak-season demand, and the ability to serve a lucrative corporate travel market that values quality furnished accommodation over budget hotels.

How Dynamic Pricing Protects Your Income

The core advantage here is obvious: when inflation drives your costs up, you can adjust your pricing immediately. You don't need to wait 12 months. You don't need to justify your increase to a tribunal. You simply respond to the market in real time.

This is especially powerful in London, where demand patterns shift dramatically throughout the year. Summer tourism, autumn conference season, major sporting events, and the steady flow of corporate relocations all create pricing windows that a fixed AST rent simply cannot capture.

A well-managed serviced accommodation property in zones 1 to 3 can realistically achieve average nightly rates between £120 and £250, depending on the property size and location. Even at conservative occupancy rates of 75% to 80%, the annual revenue often significantly outperforms the equivalent long-let rent.

The Pros and Cons You Need to Understand

The Upside

Higher revenue potential is the headline, but there are other benefits worth noting. You retain full control of your property with no long-term tenant obligations. Void periods between bookings allow for regular inspections and maintenance, keeping your asset in better condition over time. And because the property is furnished to a high standard, it tends to appreciate better as a desirable, well-maintained asset.

The Challenges

Let's be honest about the complexity. Running serviced accommodation is operationally demanding. You need professional cleaning between every guest, fresh linens, restocking of consumables, 24/7 guest communication, dynamic pricing management, and multi-platform listing optimisation. You also need to comply with local planning rules. In many London boroughs, short-term lets of under 90 nights per year require no special permission, but exceeding that threshold may require a change of use application or a specific planning consent.

There's also the 90-day rule in Greater London, which limits entire-home listings on platforms like Airbnb to 90 nights per calendar year unless you have planning permission. This is a critical detail that catches many landlords off guard.

Navigating the 90-Day Rule

The 90-day limit sounds restrictive, but experienced operators know how to work within and around it. Corporate lets and medium-term bookings of 30 nights or more fall outside the short-let definition and can run year-round without triggering the cap. Blending short stays with monthly corporate bookings is a proven strategy that maximises occupancy across the full calendar year. This is exactly the kind of hybrid approach that companies like Airhosts specialise in, combining Airbnb-style short stays with longer corporate placements to keep revenue flowing without regulatory friction.

Why Most Landlords Shouldn't Do This Alone

Here's the honest truth: the serviced accommodation model works brilliantly when it's executed professionally, and it underperforms badly when it's not. The difference between a property earning £4,000 a month and one earning £2,200 a month often comes down to listing quality, pricing algorithms, guest experience, and operational consistency.

Most landlords don't have the time, tools, or inclination to manage guest turnover, coordinate cleaners at short notice, respond to booking enquiries at midnight, or continuously optimise pricing across multiple platforms. Trying to do it yourself can quickly turn a high-yield strategy into a high-stress second job.

This is where professional short-term let management becomes not just convenient but essential. A dedicated management company handles everything from listing creation and professional photography to dynamic pricing, guest vetting, cleaning coordination, and compliance. You get the income benefits of serviced accommodation with the hands-off experience of a traditional let.

The Clearest Path Forward for London Landlords

The Renters' Rights Act has drawn a line in the sand. If you stay within the AST framework, your ability to grow rental income is now structurally limited by regulation and political risk. Every cost increase you absorb without a corresponding rent adjustment erodes your yield. And with mortgage rates still elevated compared to pre-2022 levels, that erosion hits hard.

Serviced accommodation offers a way out of that trap, but only if it's done properly. At Airhosts, we manage short-term and corporate lets across London for landlords who want premium returns without the operational headache. Our team handles pricing optimisation, guest management, regulatory compliance, and property care so that your investment works harder while you do less.

We've helped hundreds of London landlords transition from traditional lets to professionally managed serviced accommodation, and the results speak for themselves: higher yields, better property upkeep, and complete peace of mind.

Ready to Unlock Your Property's Full Earning Potential?

If the rent cap has you rethinking your strategy, you're not alone, and you're not stuck. Get in touch with Airhosts today for a free property appraisal and discover exactly how much more your London property could be earning outside the constraints of a traditional let. Your costs aren't frozen, so your income shouldn't be either.