Furnished or unfurnished: Which is best?

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Furnished or unfurnished rented homesThe question of whether to let out a property furnished or unfurnished vexes landlords all over the country. Before considering the pros and cons of either option, a landlord must first take into account their target rental market – it’s probably pointless kitting out your property as a city bachelor pad if it’s in a small town in the countryside!

Students, for example, nearly always require furnished properties, whereas families and older tenants usually provide items such as sofas, beds and wardrobes themselves.

Once you’ve decided on your target market, you can weigh up the pros and cons of furnished or unfurnished.

Furnished

Pros:

  • Access to the potentially more lucrative corporate market (i.e. you let to companies, which generally pay more, but the property usually has to be in great shape).
  • Broad appeal to students, young professionals and tenants on benefits.
  • You’re able to offset a wear and tear tax allowance of 10% against rental income.
  • Access to the short lets market – short lets usually allow a landlord to charge more in rent.
  • If you intend to move back in to your property at some point, you save on storage and transport costs

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Cons:

  • Potential damage to furnishings and the cost of replacement (half-decent beds, sofas, wardrobes etc. don’t come cheap!).
  • Agreeing the state of furnishings with tenants is tricky and often causes conflict over deposits.
  • You’re responsible for ensuring all furnishings comply with legal requirements, such as fire and safety regulations.
  • You have to insure your own furnishings.
  • A property crammed with furniture can be off putting to potential renters; try and ensure the property looks lived in, but not cluttered.
Unfurnished

Pros:

  • Tenants may stay for longer periods as they’ve made more of an ‘investment’ in the property by furnishing it. It makes moving out literally hard work.
  • You’re not responsible for insuring the tenant’s furniture and ensuring it complies with regulations.
  • Costs: No issues with wear and tear and replacement costs.
  • You can apply for council tax ‘holidays’ (i.e. you don’t pay it) during void periods.
  • If you decide to sell, you’ve lower costs when it comes to ‘moving out’.

Cons:

  • Financially you lose on the tax benefit of being able to claim up to 10% of the rent in a ‘wear and tear’ tax allowance.
  • Usually means you’re locked out of the lucrative corporate let market.
  • Properties can look bare and cold, possibly putting off potential tenants (even if they know they’re going to have to furnish it!).
  • If you already have tenants, but they’re moving out, they’re taste in furnishings could be off putting to prospective tenants being shown around during the notice period.
Insurance considerations

Even an ‘unfurnished’ property will still need a number of white goods, as well as curtains and possibly carpets. These all need insuring, so whichever option a landlord chooses getting the right buy-to-let insurance is vital.

The views expressed here are solely those of the author and do not necessarily reflect the views of Policy Expert.