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Furnished vs unfurnished: a landlord's dilemma
With valuable assets such as rental property, it is important for landlords to make the correct letting decisions. Is it better to provide rental accommodation in a furnished or unfurnished state?
Unsurprisingly, the answer is not that simple and there are benefits attached to both methods of property rental. Landlords considering the “to furnish or not to furnish” question should consider the following to help them come to a decision:
Identify the market
Before making any decisions, think about the type of tenants the property will attract. If it is close to a university and has multiple bedrooms it will appeal to students, and equipping it with furniture would be wise. However, if it's a country house close to a commuter line and good schools it may appeal more to a family – most of whom typically will have their own furniture. Focus on the target tenants and assess their furniture needs.
Benefits of furnished
This market opens up the potentially lucrative world of corporate lettings. Corporate tenants demand elevated levels of furnishing and finish in a dwelling, so if this can be guaranteed the corporate market may well be worth investigating. Likewise, students, tenants on benefits and professionals are generally attracted to furnished accommodation, giving it a wide appeal amongst a solid core market.
There are tax breaks that benefit landlords of furnished properties. Allowances for wear and tear on furniture can be obtained so it is a good idea to investigate entitlements beforehand as it may influence which route is decided upon. A good property managing agent can provide you with valuable advice dependent on your circumstances.
With furnished lets a landlord gets access to the short let market which traditionally generates higher revenues. Short term lets are often chosen for their convenience, and this extends to the readily supplied furniture as well as a shorter tenancy.
Drawbacks of furnished
All furnishings in a rental flat will need to comply with fire, health and safety and legal requirements so it’s necessary to acquire good quality beds and mattresses and other furnishing essentials. Replacing furnishings when they are damaged will be an expense to consider and insurance for the contents will be the landlord's responsibility.
Sometimes when damage to furnishings takes place the negotiations with tenants can be awkward, especially if deposits are involved.
Sometimes furnishings will put off a tenant if they are not to their taste. Try not to over clutter interiors; go for neutral colours and design schemes.
Benefits of unfurnished
Tenants tend to stay longer in unfurnished flats because they invest more into the property. Landlords are not responsible for the insurance of tenants’ furnishings. There are no wear and tear issues to deal with and if the property is put up for sale, there will be no costs associated with moving furnishings out. There may be council tax holidays when the property is vacant.
Drawbacks of unfurnished
Wear and tear tax benefits do not apply on unfurnished rentals. The corporate rental sector is not really interested in unfurnished accommodation, so that excludes such properties from a potentially lucrative market. Unfurnished lettings can be hard to let because they appear unwelcoming and cold to viewers.
There is lots to think about for landlords deciding which way to jump in the property rental market. There are pros and cons to both methods; what's important is choosing the right solution for the property in question.
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