One of the most expensive mistakes serviced accommodation operators make is assuming that rent-to-SA and managed property accounting work the same way. They don't — and getting this wrong doesn't just make your books messy, it can lead to incorrect tax filings, disputes with property owners, and serious HMRC headaches down the line.
In this guide, we're going to break down exactly how these two models differ from a bookkeeping perspective, and what you need to get right in Xero for each one.
💡 The core difference in one sentence: In R2SA, all money flowing through your business is yours. In managed properties, most of the money you receive belongs to someone else.
What Is Rent-to-Serviced Accommodation (R2SA)?
In the rent-to-SA model, you lease a property from a landlord — usually on a fixed monthly rent — and then operate it as a serviced accommodation unit on platforms like Airbnb, Booking.com and Vrbo. You're the one taking on the commercial risk, and in exchange, all of the booking revenue is yours.
This means your Xero should look like a straightforward trading business:
- All platform payouts → recorded as income
- Monthly rent to the landlord → recorded as an expense
- Utilities, cleaning, maintenance, platform fees → all expenses
- Your profit → what's left after all costs
Clean, logical, and relatively straightforward — as long as you're reconciling every platform payout correctly and not letting them pile up unreconciled in Xero.
What Is Property Management for SA?
In the managed property model, you don't own or lease the property. A property owner entrusts their property to you, and you list it on booking platforms, manage guest communications, oversee cleaning and maintenance, and handle payouts. In return, you charge the owner a management fee — typically 12–20% of the revenue generated.
Here's where it gets critically important: the booking revenue you collect is not your money. You're receiving it on behalf of the property owner. In accounting terms, it's a liability — money you owe to the owner.
The Comparison That Matters
| Accounting Area | R2SA | Managed Properties |
|---|---|---|
| Booking Revenue | Your income — record in full | Owner's money — record as liability |
| Your Income | All platform payouts | Management fee only (e.g. 15%) |
| Expenses | All costs you incur | Only your operating costs |
| Owner Payments | N/A (you are the operator) | Regular payouts to property owners |
| VAT Complexity | Standard SA VAT rules apply | Only your fee is subject to VAT |
| Bank Reconciliation | Match payouts to your income accounts | Match payouts to trust/liability accounts |
Why Getting This Wrong Is So Costly
We've seen operators in the managed property model who were recording all of their booking revenue as income. On the surface the business looked like it was turning over £500k+ per year. In reality, their actual income — their management fees — was closer to £75k. The implications for VAT registration, Corporation Tax and personal tax are enormous.
Equally, if you're a managed property operator and you're paying owner payouts but not recording the incoming booking revenue as a liability first, your accounts will never balance cleanly. Every month will be a reconciliation nightmare.
How to Set This Up Correctly in Xero
For R2SA:
- Create income accounts for each platform (Airbnb Income, Booking.com Income, Direct Booking Income)
- Use Tracking Categories for each property so you can see per-property P&L
- Set up bank rules to auto-categorise recurring payouts
- Reconcile monthly — don't let it stack up
For Managed Properties:
- Create a Trust Liability account (or clearing account) for owner funds received
- Record all incoming booking revenue to the liability account, not income
- Record your management fee as income when it's earned (usually monthly)
- Record owner payouts as reductions of the liability
- Owner statements should reconcile exactly to the liability movements each month
📋 The owner statement test: If your monthly owner statement balances correctly and your Xero liability account clears to zero after every owner payout cycle, your accounting is set up correctly.
Not sure if your Xero is set up correctly?
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Book a Free CallWhat About Operators Doing Both?
Many SA operators run both R2SA properties and managed properties simultaneously. This is perfectly fine, but it means your Xero needs to be set up to handle both models clearly. We typically recommend using separate tracking categories or even separate Xero organisations for each, depending on the scale of the business and whether different legal entities are involved.
The most important thing is that the two revenue streams never get mixed together — your R2SA income and your management fees need to be clearly separated both in your accounts and in your tax filings.
If you're running a growing SA business and you're not 100% confident that your books are structured correctly for your model, this is exactly the kind of thing we fix for operators every week. It's not complicated once it's set up right — but getting there from a messy starting point does take some work.