The Serviced Accommodation Loophole: How London Landlords Are Sidestepping the Renters' Rights Act

A Seismic Shift Is Coming for London Landlords

With the Renters' Rights Act officially taking effect on 1 May 2026, the countdown is well and truly on. In just a few weeks, the biggest overhaul of England's private rental sector in a generation will reshape how landlords manage tenancies, handle evictions, review rents and structure their agreements.

For traditional buy-to-let landlords, the changes are significant. Section 21 "no-fault" evictions are being abolished. All tenancies will become periodic by default. Rent review clauses face strict new limitations. And Section 8 possession grounds are being tightened in ways that make regaining your property slower and more uncertain.

But here's the thing: not every property arrangement falls under these new rules. A growing number of savvy London landlords and property investors are turning to serviced accommodation agreements to operate entirely outside the Renters' Rights Act framework. It's legal, it's legitimate, and it's already gaining serious momentum across the capital.

Let's break down exactly how it works, what you need to know, and whether it's the right move for your portfolio.

What Is the Serviced Accommodation Loophole?

At its core, the strategy hinges on a simple but powerful legal distinction: a licence to occupy is not a tenancy.

The Renters' Rights Act applies to assured shorthold tenancies (ASTs) and their successors under the new periodic tenancy model. Serviced accommodation agreements, however, are structured as licences rather than tenancies. This means the occupier is a "licensee" rather than a "tenant," and the arrangement falls outside the scope of the Act entirely.

When a landlord provides a fully furnished property with services included (think Wi-Fi, utilities, regular cleaning, linen changes and a concierge or check-in service), the arrangement looks and functions more like a hotel stay than a residential tenancy. Legally, that distinction matters enormously.

Corporate lets to business travellers, furnished accommodation for relocating executives, insurance housing for displaced families, and short-to-medium-term stays for project workers all typically operate under these licence agreements.

How Serviced Accommodation Agreements Work in Practice

A well-drafted serviced accommodation agreement will typically include:

• A defined service package that goes beyond simply providing a roof. This includes furnishings, utilities, broadband, regular housekeeping, and linen provision as a minimum.
• A licence to occupy rather than exclusive possession language. The host retains access rights for cleaning, maintenance and service delivery.
• Flexible duration terms, often ranging from a few nights to several months, without creating security of tenure.
• No requirement for deposit protection under a tenancy deposit scheme, since the arrangement is not an AST.
• Freedom from rent review restrictions introduced by the Renters' Rights Act, allowing pricing to respond to market demand in real time.

For landlords who structure this correctly, the result is full flexibility over pricing, duration and occupancy, with none of the new regulatory constraints that will bind traditional landlords from May onwards.

The Pros: Why London Landlords Are Paying Attention

Higher Yields

Serviced accommodation in London consistently delivers two to three times the rental income compared to traditional long lets. Corporate clients and business travellers expect to pay premium rates for the convenience, flexibility and quality of a fully serviced property.

Complete Regulatory Freedom

No periodic tenancy obligations. No Section 8 headaches. No abolished rent review clauses to worry about. You set the terms, and the licence agreement governs the relationship.

Flexibility to Pivot

Want to use the property yourself for a month? Need to pull it off the market for renovations? With a licence structure, you are not locked into the rigid possession processes that the new Act imposes on traditional landlords.

The Cons: What Could Go Wrong

This is where many landlords get tripped up, so pay close attention.

Getting the Legal Structure Wrong

The single biggest risk is drafting an agreement that looks like a licence but functions like a tenancy. Courts have a long history of looking beyond the label on the document. If your "licensee" has exclusive possession, pays a fixed monthly sum, and receives no meaningful services, a court may reclassify the arrangement as a tenancy. At that point, every protection under the Renters' Rights Act snaps into place, and you could face penalties for non-compliance.

The Operational Burden Is Real

Serviced accommodation is not passive income. You need to coordinate guest communications, check-ins, professional cleaning, laundry, maintenance, listing management, and dynamic pricing. Managing even one or two properties at this level is closer to running a hospitality business than being a landlord.

Planning and Licensing Requirements

In many London boroughs, short-term lets are subject to the 90-day rule under the Greater London Council (General Powers) Act 1973. If your stays fall below 90 consecutive nights, you may need planning permission for a change of use. Corporate lets of 90 nights or more generally avoid this issue, but you need to be strategic about your booking mix.

Tax Implications

Serviced accommodation income may be treated differently for tax purposes. Furnished Holiday Let (FHL) tax status has undergone recent changes, and you should speak to a specialist property accountant before restructuring your portfolio.

The Honest Truth: This Strategy Is Not for DIY Landlords

Here's where we need to be straight with you. The serviced accommodation model is powerful, profitable and perfectly legal. But the margin for error is thin, and the operational demands are significant.

Landlords who try to manage serviced accommodation themselves often find that the higher income is quickly eaten up by the time, stress and cost of running what is essentially a small hospitality operation. Missed messages, inconsistent cleaning, pricing mistakes and compliance gaps can turn a lucrative strategy into a liability.

This is exactly why so many London property owners partner with a professional management company like Airhosts. Rather than navigating the complexities of licence agreements, guest management, dynamic pricing and regulatory compliance on your own, you hand the entire operation to a team that does this every single day across London.

Why Professional Short-Term Let Management Is the Smarter Play

Whether you're attracted to the serviced accommodation model for its Renters' Rights Act exemption, its superior yields, or its flexibility, the reality is that you get all of those benefits more reliably when a specialist manages the process for you.

With Airhosts, your property is listed across all major booking platforms, priced dynamically to maximise revenue, maintained to five-star standards, and managed end-to-end so you never have to deal with a single guest enquiry or cleaning schedule. The legal structuring is handled properly from day one, so your licence agreements are watertight and your compliance is airtight.

You keep the high yields. You keep the flexibility. You keep the regulatory freedom. But you lose the operational headache entirely.

For London landlords staring down the Renters' Rights Act and wondering what comes next, this is the clearest path forward: genuinely hands-off income that outperforms traditional buy-to-let by a wide margin, without the DIY risk of getting the serviced accommodation model wrong.

Ready to Future-Proof Your London Property Income?

The Renters' Rights Act takes effect in just over four weeks. Landlords who act now still have time to restructure their approach and start generating higher, regulation-free income before the new rules bite. Airhosts is already helping landlords across London make this transition smoothly, profitably and with zero stress. Get in touch today for a free property income assessment and find out exactly what your property could earn as a professionally managed short-term let.