To Furnish or Not to Furnish – That is the Question!
Published on July 6, 2016 by Sarah Mac
When you are entering the letting market, you may find it difficult to decide whether to let your property furnished or unfurnished. It can depend on what kind of tenants you wish to target: students, for example, are usually looking for furnished accommodation. Your agent will advise you on the market in your area, and what sort of tenants will suit your property.
Aside from that, there are benefits to both furnished and unfurnished lets. Once you have weighed up the pros and cons of each, you will be better placed to decide what will be best for your circumstances.
The Benefits of Letting Furnished
Many agents prefer a furnished let because they often find it easier to get tenants for them. Young people or those on lower incomes may not have the wherewithal to obtain their own furniture. Rental charges for furnished properties can be slightly higher.
Of course, this makes for a bigger profit for you, as the landlord, as well. When a property is furnished and maintained to a high standard, you may be able to let it to companies, or there is always the short let market option, which attracts even higher rents. And once the tenancy has run its course, you still have the furniture. Another advantage is that you can claim the cost of most replacements on your tax return. This is a new tax law which replaced the former fair wear and tear allowance from April 2016.
The Downside of Letting Furnished
Some of the potential for a higher rental income is offset by additional expenses. You must comply with fire regulations regarding all your soft furnishings, which means having proof that they meet fire resistant standards. You would also be well advised to have all your electrical goods regularly tested to be sure they are safe and work properly.
You’ll probably want to insure your contents, and premiums can be quite a bit higher for the furniture in rented properties, as tenants are less likely to take care of what they don’t own. Replacing damaged items will also add expenses before you can attract a new tenant, although this will probably be offset later on your tax return.
Another disadvantage is that you may find that you have a higher turnover of tenants in furnished accommodation, as it’s easier for them to move on unencumbered by pieces of heavy furniture to take with them.
What About Letting Part Furnished?
The pros and cons of this option will be similar to letting fully furnished. Sometimes this is even more attractive to potential tenants who have a few items they would like to bring. Many people prefer less furniture to interfere with their vision of the ideal place to live when they are viewing a possible new home. You may need to discuss what they need and what they can provide for themselves. Of course, if you move any of your own items out, you will need to dispose of them or store them somewhere – all more expenses for you.
The Benefits of Letting Unfurnished
Unfurnished properties tend to attract more mature tenants: those with families on higher incomes who can afford to invest in their own furniture. This means they are more likely to stay put for longer periods as well. When they do leave, if there is a period between tenancies when the place is unoccupied, you can apply for relief from council tax liabilities.
You will also save on the costs of replacing damaged items and making good again. There will be no problems complying with safety and fire regulations. Neither is there a need for expensive insurance, although unfurnished does not let you off the hook with supplying kitchen appliances, which can be covered on your landlord insurance.
The Disadvantages of Letting Unfurnished
Some unimaginative potential tenants may be put off by empty spaces when viewing. You won’t be able to let to the corporate or short let markets, and it can take longer to find the right tenants, depending on the location of the property.
Recognising all these pros and cons should help you to decide which option is right for you and your property. Don’t forget to take its location into consideration as well. If, for example, the area is flooded with student lets, it can be harder to let an unfurnished property. If it sits in a really upmarket area, very young tenants who go for furnished accommodation may cause problems with neighbours. Between these two extremes, you would be wise to take the advice of a letting agent.