Letting a property means making tough decisions as a property owner, such as whether to rent out your apartment furnished or unfurnished.
The decision can greatly affect your chances of finding a tenant. It will also have an impact on the kind of renters you attract, be they, young professionals or families. But it’s not just about your competitiveness on the market, it also is a question of maximizing your property’s value while balancing your level of involvement as a landlord.
Over a quarter of Londoners rent privately. That’s 2.4 million people. What’s more, they’re spending nearly 40 percent of their income on rent, according to the Mayor of London’s office.
Landlords are facing stiff competition, making it more important than ever to secure a tenancy by giving renters what they want. But is that a furnished, part-furnished or an unfurnished home? Let us help you decide.
Unfurnished properties usually only include the essential kitchen and bathroom fittings. Most will also include curtains or blinds.
Confused by this term? Don’t panic. Part-furnished simply means that the apartment includes some basic furniture alongside the essentials in the kitchen and amenities in the bathrooms. Think bed, sofa, dining table and some chairs.
Furnished properties have all the necessary furniture plus extras like bookcases, wardrobes and coffee tables. High-end furnished properties may also include kitchenware, towels, bed linens and decorative items.
Furnished properties take more time and money to furnish and maintain. However, in central London, renters are looking for furnished homes like never before. For example, in 2017, 91 percent of properties let in Zone 1 were part or fully-furnished. Therefore, landlords of furnished apartments have a competitive advantage in the market.
Professionals who move apartments regularly for work don’t want to be lugging bulky furniture between cities, let alone countries. Furnished apartments offer these kinds of renters the freedom to come and go, enjoying turnkey living in a property that’s more like home than a hotel, but just as faff-free. Business travelers may be more likely to keep your apartment in good condition than families with young children, too.
Kitting out your apartment may come with a hefty upfront cost, but it’s an investment well worth making. Higher quality apartments demand a higher price which the professional tenants you’ll attract will be willing and able to pay, providing a strong return on investment. Location-dependent, a premium in rental income can pay for the furniture in under a year. Use that for future tenancies and keep it or sell it on afterward.
Furnished apartments tend to attract transient renters who want short-term lets. This increases the risk of gaps between tenancies, decreasing financial stability and enhancing stress. It creates more work for the landlord and a higher turnover of tenants increases the risk of someone taking a less than respectful attitude to your property.
Tenants may want to bring their own furniture meaning you either say no and risk losing them or pay for costly storage for your items. However, this is unlikely to be an issue if you offer a furnished property in an area with high demand for furnished properties, as tenants wanting unfurnished homes will be searching elsewhere.
The more items you furnish your rental property, the more there is for a tenant to damage and the more you’ll pay for contents insurance. That is, especially as landlords usually have to pay a premium to insure a rental property’s contents anyway.
While landlords can no longer claim a wear and tear allowance of 10% of the rent, the cost of replacing furniture, furnishings, kitchenware, and appliances like for like during a tenancy is tax-deductible, and you can pass on the extra insurance cost in the rent. There is more maintenance required as you’ll want to arrange a contents inventory or pay an agent to do it for you, but again, you can charge more rent to cover this.
Renting out an unfurnished apartment means you won’t have to spend a lot of money in one go on furniture and contents insurance. This is a good option if you’re short on cash and need to start generating an income from your rental quickly.
Tenants wanting unfurnished properties tend to ask for longer tenancies. They are often families who already have a lot of furniture and personal belongings and don’t want the stress of having to move regularly. This means more stability for you, as the property owner.
Renters in most London areas are looking for furnished properties more than unfurnished properties. So, if your flat is sparse it may take you longer to find a tenant, resulting in you losing your rental income and additional work (on the part of you or a paid letting agent).
It can be hard for tenants to envision living in an unfurnished space. Furnished properties instantly sell them a lifestyle as well as a home.
When researching which rents better, the golden rule is to meet the needs of the renters who want to live in your area. If there is a high proportion of furnished stock in your locale, you can bet that the majority of tenants will be wanting – and expecting – to find a furnished home.
Furnished London properties usually command higher rentals than their unfurnished equivalents and will always let faster where they are more in demand. This leads to fewer gaps between tenancies and more rental income for you.
In London, the rental premium of furnishing can be significant. Furnished properties in London’s Zone 1 enjoy a 7.8 percent premium and furnished flats in Zone 2 see a 21.9 percent premium, according to Foxtons.
In 2015, the David Phillips Furnished Index found that UK landlords may have missed out on £300 million of extra rental income by failing to furnish their rental properties.
This property tool, built using nearly 400,000 UK property records, shows that appropriate furnishing can increase rental yields by as much as 60 percent, making it a no brainer to furnish a rental apartment in the majority of UK postcodes.
In Canary Wharf, a London district that’s popular with professionals, 94 percent of rental properties are furnished. These furnished apartments are generating an average of 17 percent premium in rental income. Over three years, landlords can expect to enjoy a cumulative premium of £14,424 based on the average monthly furnished rent of £2,535 versus the average monthly unfurnished rent of £2,167.
It’s safe to assume, therefore, that tenants looking for a rental property in Canary Wharf will be wanting and expecting a furnished apartment. So Canary Wharf landlords, furnish that apartment!
If you’re unsure about the demand for a furnished property in your London postcode, search online to see if the majority of listings are furnished or unfurnished and ask a local letting agent for some rental market insight.
The more furnished rental stock there is in an area, the higher the expectation of tenants for a furnished property.
Landlords with properties in areas that are predominantly unfurnished may still want to consider furnishing their apartment if it is a new-build and close to a Tube station, as these flats tend to attract commuting professionals with furnished expectations.
Likewise, furnished apartments close to airports will attract tenants who are on the move a lot and properties close to universities will enjoy demand from students who are unlikely to own their furniture.
To marry the ease of renting unfurnished with the income of renting furnished, Blueground will outfit your space with premium furniture and quality appliances while also taking care of finding guests and handling their needs.
Blueground’s move-in ready homes attract senior business executives, athletes and management consultants looking for stays from 30 days or more. Any questions, complaints or property maintenance issues that may arise are handled, so as the owner you don’t have to lift a finger! Best of all, wave goodbye to rental gaps forever! You are always guaranteed a steady income month by month, regardless of the apartment occupancy rate. With Blueground you can feel confident that your property is always in good hands.