Furnished or unfurnished?

Buying all the furniture for a property can be a major expense. Should you go ahead, or is it best to let tenants bring their own furniture? This article will take you through the pros and cons of letting a property furnished or unfurnished.

There are no strict rules regarding whether a landlord should furnish a property. It’s completely up to you whether you do offer it with nothing but bare walls and floorboards, or complete with furniture, appliances, tools, kitchenware, bathroom scales and shoe horns.

Nevertheless, the decision to let a property furnished or unfurnished will make a different to your chances of finding a tenant and the kind of tenant you will attract.

Positives about furnishing a property include:

-       It saves tenants money, since they do not need to buy furniture.

-       You may be able to let the property more quickly because there are more tenants looking for furnished lettings.

-       When the tenancy ends, you will still own the furniture and can use it yourself, or move it around for different tenant requirements.

-       You can deduct a percentage of the cost of the furniture from your tax liability.

Positives about letting an unfurnished property include:

-       Tenants who buy their own furniture may stay for longer periods, since they have made an investment and moving could be complex and expensive.

-       Tenants may be happier with their own furniture and less problematic for you.

-       You are not responsible for insuring tenants’ furniture or any other items they bring into the property.

-       You have no concerns over wear and tear if the property is let unfurnished.

Part-furnished properties

Another option is to let a property ‘part-furnished’, which is a term completely open to a landlord’s interpretation. You could put in everything except beds (since many tenants have their own) or you could show the property to potential tenants, offering them the choice of additional furniture or not.

This is favoured by letting agents, as it allows for greater flexibility and therefore makes it easier to find potential tenants. Ideally, there should be furniture that makes the property look ‘lived in’ and functional, but not so much that it is cluttered, as this can off-put potential tenants.

In general, landlords with larger apartments or houses tend to let them unfurnished, since tenants are likely to be older and may have families, along with their own furniture. Smaller properties are more often furnished and attract younger, more mobile tenants.

Insurance

You are not legally obliged to take out contents insurance when you furnish a rented property, but you are strongly advised to do so.

A common practice is to hire an inventory agent who will make a detailed list of everything in the property before the tenancy starts. When the tenancy ends, an agent will return to check that everything is still there and make a note of any damage or wear and tear. You are not allowed to charge tenants the full cost of replacing items suffering from normal wear and tear.

Safety standards

Upon letting a property you should carry out a Portable Appliance Test (PAT), this will ensure that all electrical appliances are in good working order and are safe. This is not a legally required test, but is helpful to assure potential tenants that their safety is taken seriously.

Furniture must confirm to the legal fire resistant standard – all fabric furniture such as sofas and armchairs must have labels proving that they have met this fire standard.

Income tax issues

If you let furnished property, you are permitted to claim an allowance on the tax you pay for letting income, equal to 10% of the ‘net rent’ i.e.  the total rent minus charges and services such as council tax and water rates. This is known as ‘wear and tear allowance’.

Alternatively, you can claim the net cost of replacing a particular item of furniture, but not the original cost of the item. This is known as a ‘renewable allowance’.

You cannot claim either of these allowances on an unfurnished property. And you have to decide which allowance you want to claim and stick with it.

So furnished or unfurnished?

Some letting agent’s think they can achieve higher rents from furnished properties than unfurnished – somewhere between five and ten % – but most argue that flexibility is key. The best thing a landlord can do is offer whatever arrangement meets the need of the tenant.

For more information and advice on how to let out your property, contact Discount Landlord on info@discountlandlord.co.uk

Gaurav Ahluwalia

www.discountlandlord.co.uk