A serviced accommodation operator offers you twelve months of guaranteed rent, no voids, no tenant management and a professional-looking company let agreement. It is an attractive proposition, and for some landlords it works. But the risks of renting to serviced accommodation operators sit almost entirely with you, the owner — and since 1 May 2026 they sit there more heavily than before.
The Renters’ Rights Act 2025 raised maximum civil penalties for licensing offences to £40,000, doubled rent repayment orders to two years’ rent, and — critically for anyone considering a rent-to-rent arrangement — reversed the Supreme Court decision that had shielded superior landlords from those orders. If your operator runs the property unlawfully, “I just own the freehold” is no longer the answer it was.
This guide sets out what these deals actually are, where the liability lands, and the checks to run before you sign.
Key takeaways
- Section 103 of the Renters’ Rights Act reversed Rakusen v Jepsen. Superior landlords in rent-to-rent chains can now be the target of a rent repayment order where they commit an offence, and section 104 extends liability to company directors who consent, connive or are negligent.
- Maximum rent repayment orders rose from 12 months’ rent to 24 months’ rent on 1 May 2026, and civil penalties for licensing offences rose to £40,000.
- Most buy-to-let mortgages and standard landlord insurance policies prohibit subletting and short-term letting. Letting to an SA operator without written consent can breach both.
- In Greater London, short lets of an entire home for more than 90 nights in a calendar year need planning permission — and the owner, not the operator, is who the council pursues.
- Guaranteed rent is only as good as the operator’s balance sheet. Most SA operators are small, thinly capitalised limited companies with no assets to enforce against.
What you are actually being offered
These deals go by several names — rent-to-rent, rent-to-serviced-accommodation (R2SA), guaranteed rent, corporate let, management agreement — but they share one structure. You grant a company the right to occupy and sublet your property. The company pays you a fixed monthly sum and keeps whatever it earns above that.
What varies, and what matters enormously, is what the operator does with the property:
| Model | How the operator earns | What it exposes you to |
|---|---|---|
| Short-stay / serviced accommodation | Nightly bookings via Airbnb, Booking.com and corporate contracts | Planning breach, mortgage and insurance breach, wear from high turnover, neighbour and freeholder complaints |
| Rent-to-rent HMO (room-by-room) | Individual room lets on monthly tenancies | HMO licensing offences, fire safety liability, rent repayment orders, deposit protection failures |
| Corporate / contractor housing | Fixed contracts with employers or relocation agents | Lower risk if genuinely corporate, but check who actually occupies |
The rent-to-rent HMO model is where the sharpest legal risk now sits, because it engages licensing law. If your operator puts five sharers into your three-bedroom house, that property is a licensable HMO — and if no licence is in place, an offence is being committed at your address.
Risk 1: your mortgage and your insurance
Almost every buy-to-let mortgage contains a covenant requiring the property to be let on an assured shorthold tenancy (now an assured tenancy) to individuals, and prohibiting subletting or short-term letting. A company let to an SA operator breaches that clause unless the lender consents in writing.
Lenders discover it more often than landlords expect: from a listing photograph, a neighbour’s complaint, a council enquiry, or a revaluation. The consequence is rarely a friendly conversation — it is typically a demand to end the arrangement, a switch to a higher rate, or in serious cases a demand for repayment of the loan.
Insurance is the same problem with a worse outcome. A standard landlord policy is underwritten on the assumption of a single tenancy with an individual. Short-term letting materially changes the risk, and an insurer that finds out after a fire or a liability claim can decline the claim entirely. Our guide to landlord insurance explains what needs to be disclosed.
What to do: get written consent from the lender and a written endorsement from the insurer, naming the arrangement, before the operator takes occupation. An operator who discourages you from asking is telling you something.
Risk 2: licensing — and the liability change that matters most
Until 2026, a landlord in a rent-to-rent chain had a useful shield. In Rakusen v Jepsen the Supreme Court held that a rent repayment order could only be made against the tenant’s immediate landlord — the operator — not the superior landlord who owned the building.
That shield has gone. Section 103 of the Renters’ Rights Act reversed the decision. A rent repayment order can now be made against a superior landlord where that landlord has committed a relevant offence, and section 104 allows an order against a company officer where the offence was committed with their consent or connivance, or is attributable to their neglect. Applications can be brought up to two years after the offence, for up to two years’ rent.
Alongside that, the maximum civil penalty for licensing offences rose from £30,000 to £40,000, and enforcement can be directed at anyone “managing or controlling” the property (see NRLA guidance on civil penalties) — which is exactly how a hands-off owner in a rent-to-rent chain can find themselves in scope.
This does not make every owner automatically liable for an operator’s failings. It removes the automatic protection. If you knew, or should have known, that your property was being run as an unlicensed HMO, you are now realistically exposed. Read our HMO licensing compliance guide to understand what your property would need.
Risk 3: planning, leases and the 90-night rule
Using a dwelling for short-term letting can amount to a material change of use requiring planning permission. In Greater London the rule is specific: under section 25 of the Greater London Council (General Powers) Act 1973, letting a residential property for temporary sleeping accommodation for more than 90 nights in a calendar year is a change of use requiring planning permission. Councils in Westminster, Camden, Kensington and Chelsea and elsewhere enforce it actively, and the enforcement notice goes to the owner.
Outside London there is no national night limit, but a change of use can still be found on the facts — frequency of turnover, marketing, and impact on neighbours. Several coastal and city authorities now take a firm line.
If your property is leasehold, check the lease before anything else. Most residential long leases contain covenants requiring use as a private dwelling and prohibiting sharing occupation or business use. Breaching them risks forfeiture proceedings and an unmortgageable, unsellable flat.
Risk 4: the operator’s finances
Guaranteed rent is a contractual promise from a limited company. If that company cannot pay, your remedy is a claim against a business that may have £100 of share capital and no assets.
SA margins are thin and seasonal. An operator running on 70% occupancy assumptions in a market that delivers 55% is loss-making by spring. The pattern owners describe is consistent: rent arrives late, then partially, then a request to renegotiate, then the company stops responding and the keys come back — often with a property that has taken two years of hotel-grade wear, an unpaid utility account and, sometimes, an occupier still in it.
Before signing, obtain: the company number and filed accounts, a Companies House check for prior dissolved companies with the same directors, a CCJ search, and — the single most useful protection — a personal guarantee from the directors. An operator with a viable business will discuss it. One who refuses outright is telling you the guarantee is the only thing that would ever be worth anything.
Risk 5: who is actually living there
A genuine company let — a limited company as tenant, no individual occupying as their only or principal home — sits outside the assured tenancy regime, so the Renters’ Rights Act possession rules do not apply to it. That is the one structural advantage of these deals for a landlord.
But the label on the agreement does not decide the question; the substance does. Where the real occupier is an individual living there as their home, a court can find an assured tenancy exists despite the company wrapper — and you are then in the post-Section 21 world, needing a ground under Section 8 to recover possession from someone you never chose or referenced. Our guide on what to do when a tenant will not leave now Section 21 has gone sets out how long that takes.
Seven checks before you sign
Ask your mortgage lender in writing, describing the arrangement accurately. Keep the reply.
A policy endorsement naming short-term or company letting, not a verbal assurance from a broker.
Confirm the use is lawful, including the 90-night rule in London and any leasehold covenants.
Agree exactly how the property will be occupied, who holds any licence, and that room-by-room letting is prohibited without your consent.
Filed accounts, director history, CCJ search, and a personal guarantee from the directors.
A contractual right to inspect quarterly with notice, and to see booking and occupancy records on request.
A defined break clause, a dilapidations schedule agreed at the outset, and a full photographic inventory.
The tax picture has changed too
Two changes catch landlords who assume serviced accommodation carries the old holiday-let advantages.
- The furnished holiday lettings regime was abolished from 6 April 2025. Full mortgage interest deductibility, capital allowances on furnishings, business asset disposal relief and the pension-relevant earnings treatment all went with it. Short-let income is now taxed broadly like any other property income.
- Business rates versus council tax. A property genuinely available for short letting for enough days in the year can be assessed for business rates rather than council tax — but the qualifying thresholds are strict, and if the operator walks away mid-year the liability question lands back with you.
If you are comparing models rather than committing to one, our guide to landlord obligations for short-term holiday lets compared with long lets sets the two side by side.
What is coming: registration and the C5 use class
The government has committed to a mandatory short-term let registration scheme in England, and to a new C5 planning use class that would let councils control conversions of homes into short lets. Neither is in force yet, and the implementation timetable has slipped more than once. Treat both as near-term risks to the model rather than settled law, and check the current position before relying on it.
Separately, the private rented sector database and the landlord ombudsman created by the Renters’ Rights Act are being introduced in stages. Our guide to when the PRS database and landlord ombudsman arrive tracks the timetable, and the ombudsman guide explains how complaints will work.
When these deals do work
Plenty of SA operators are competent businesses, and the model can suit a landlord who wants genuinely hands-off income from a property in a location with real short-stay demand — near a hospital, an airport, a business district or a tourist centre.
A good arrangement looks like this: an established operator with filed accounts and a track record you can verify; written lender and insurer consent in place; the use lawful under planning and the lease; a personal guarantee; a rent that is realistic rather than the highest offer on the table; quarterly inspections that actually happen; and a clear, dated exit. If an operator is offering 20% above market rent and resisting the paperwork, the extra rent is the price of the risk they are transferring to you.
For a property being run as a short let, controlled key access matters more than most owners realise — see our guide to key safes for short-term rental properties and our review of the best key safes for landlords.
If it is already going wrong
Act early, in writing, and document everything.
- Inspect. Exercise your contractual right of inspection and photograph the condition and the number of occupants.
- Establish who is in occupation and on what terms. This determines your legal position more than the head agreement does.
- Check the licensing position with the council before they check it with you. Where a licence is required and missing, applying promptly is materially better than being found out.
- Notify your lender and insurer if the use has changed. Late disclosure is bad; non-disclosure is worse.
- Take advice before serving anything. Whether you can end the arrangement quickly depends on whether a genuine company let or an assured tenancy exists.
Conclusion
Renting to a serviced accommodation operator is not automatically a bad decision. It is a decision to swap tenant management for counterparty risk, regulatory exposure and a loss of control over how your asset is used.
What changed in 2026 is the price of getting it wrong. Bigger penalties, longer rent repayment orders, and the removal of the superior-landlord shield mean an owner can no longer assume the operator absorbs the consequences. If you do the seven checks above and get written answers to all of them, the model can work. If you cannot get those answers, the guaranteed rent is not guaranteed — it is just priced.
Frequently asked questions
Can I be fined for what a rent-to-rent operator does in my property?
Potentially, yes. Enforcement can be directed at a person managing or controlling the property, and since 1 May 2026 a rent repayment order can be made against a superior landlord who commits a relevant offence. The old protection from Rakusen v Jepsen was reversed by section 103 of the Renters’ Rights Act.
Do I need my mortgage lender’s permission to let to an SA operator?
In almost all cases yes. Standard buy-to-let terms require letting to individuals on an assured tenancy and prohibit subletting or short-term letting. Get consent in writing before the operator takes occupation.
Will my landlord insurance still cover the property?
Not without disclosure. Short-term and company letting materially changes the risk, and an undisclosed change can leave a claim declined. Ask for a written endorsement naming the arrangement.
Is a company let still outside the Renters’ Rights Act?
A genuine company let, where no individual occupies as their only or principal home, remains outside the assured tenancy regime. But a court looks at the substance rather than the label, so if an individual is living there as their home, statutory protection can apply regardless of how the agreement is titled.
What is the 90-night rule?
In Greater London, letting a whole home as temporary sleeping accommodation for more than 90 nights in a calendar year is a material change of use requiring planning permission, under section 25 of the Greater London Council (General Powers) Act 1973. Enforcement is directed at the property owner.
Is guaranteed rent actually guaranteed?
Only to the extent the operator can pay. It is a contractual promise from a limited company, so its value depends on that company’s finances. A personal guarantee from the directors is the single most useful protection to negotiate.
Can I get the property back if the operator stops paying?
That depends on who is in occupation. Against a genuine company tenant you rely on the contract’s termination provisions. If an individual occupier has acquired an assured tenancy, you need a Section 8 ground and a court order, which takes months.
About this guide
Written by the Landlords Portal team for UK landlords considering rent-to-rent and serviced accommodation arrangements. Legal positions were checked against legislation.gov.uk, GOV.UK and NRLA guidance in August 2026.
This article is general information, not legal, tax or financial advice. Rent-to-rent arrangements turn on their exact terms and on who occupies the property — take advice from a solicitor before signing or ending one.
