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Properties in the United Kingdom can be let either furnished or unfurnished. As with all areas of property investment and being a landlord, there are pros and cons to both options and the route you choose to pursue will depend on the characteristics of your property, how actively you intend to manage the property, and your own investment strategy and preferences. However, for those property owners who do opt to let their properties as furnished, it is worth delving into how this can be done in a manner that truly adds value.
Furnished vs Unfurnished Rental Properties
Although it may seem obvious, it is important to consider what it means to let a property as furnished or unfurnished, as there can be a significant amount of variation across the spectrum. Firstly, letting an unfurnished property does not mean solely providing the bare bricks and mortar of a building. Landlords are required to provide their properties with the essential requirements as to make them habitable for tenants. This means ensuring that the property has sufficient and appropriate kitchen fixtures, bathroom fixtures, and flooring. Beyond this, property owners can begin to use their discretion.
Many landlords opt to include additional furnishings for their tenants, despite advertising the property as ‘unfurnished’. Perhaps the most common addition to unfurnished properties is the provision of ‘white goods’ which include items such as:
- Dishwashers
- Washing machines
- Dryers
- Fridges
- Freezers
Whilst larger family homes may commonly be let without white goods, those properties targeting students, young professionals, or shorter-term lets will almost certainly need to include white goods to appeal to their desired target audience. Many tenants, especially those who tend to reside in properties for shorter periods, are unlikely to have their own white goods and will want to avoid the hassle of having to move such goods from one tenancy to another.
White goods aside, landlords may also choose to include certain softer furnishings in their properties to enhance their desirability to prospective tenants. It is not uncommon for landlords to provide blinds or curtains for their properties. They may also choose to include certain smaller items such as mirrors, or additional bathroom and kitchen fixtures. However, this is all down to the landlord’s preference and does not constitute a furnished accommodation.
Strangely, there is no legal definition of what makes a property, furnished, part-furnished or unfurnished. However, His Majesties Revenue and Customs advocate the following:
“To be classed as furnished, the property must comply with the Stamp Office definition of “furnished”, meaning that the tenant can move into the property without having to take with him any furniture at all. The property should therefore contain as a minimum such items as a sofa, one or more beds, plus a dining table and chairs, a cooker, carpets, curtains, and other white goods in the kitchen. If the property only contains curtains, carpets, and white goods in the kitchen, this would not be classed as a furnished property.”
As a consequence, part-furnished properties may include a non-exhaustive number of the above, meaning that there are insufficient furnishings for the property to be truly considered ‘furnished.’ Typically, furnished accommodation will include most, if not all, of the below:
- Sofas and/or armchairs
- TV stand or wall mount
- Dining table and chairs
- Storage cupboards
- One or more wardrobes
- Chest of drawers
- One or more beds
- Bedside units
Why Would You Let A Furnished Property
Letting a furnished property often requires a higher capital outlay and increased maintenance costs. With this in mind, you may question why a property owner would let a property as furnished.
The key reason a property owner may choose to let a property as furnished is to appeal to a specific sub-section of tenants that may be underserved in the local market. Furnished rentals can be highly appealing to higher-end tenancies, such as successful young professionals, corporate lets, overseas tenants, short-term lets, or those people seeking a place to reside which is closer to work through the week. In many cases, such tenants will pay a premium to reside in a fully furnished property. By letting their properties as fully furnished, landlords can unlock new markets and achieve potentially more profitable rents whilst doing so.
From a tenant’s perspective, renting a furnished property means that they won’t have to spend a significant amount of their time and money furnishing a property when moving in. It provides additional flexibility and time savings, which are dearly appreciated. By providing additional furnishings as part of the tenancy, landlords are giving tenants an additional level of service which is compensated for through higher rents.
If done correctly, the rental uplift of letting a furnished property over the course of a couple of years may be more than the cost of the furniture, whilst also making the property more desirable and thus reducing voids. As such, letting furnished accommodation can be a profitable long-term strategy for property owners seeking to make additional returns.
Know Your Target Market for Your Rental Property
The most important step in letting out a furnished property is understanding your target market. That is, the tenants you wish to move into your property. Your target market will considerably impact the type and quality of furnishings that will be needed in the property. For example, holiday lets, with their short-term nature, allow more room for expressive and characteristic furnishings. Whereas, furnished accommodation for students will require more basic and replaceable furnishings, given the nature of the wear and tear they may accrue. Below is a breakdown of some of the main tenancy types where fully furnished properties can be advantageous.
| Type of Tenant | Furnishing Requirement | Implications for Furnishing |
|---|---|---|
| Holiday Lets | Fully furnished to a high standard. | Holiday lets are, by their nature, short-term. As such they require that the property be fully furnished to a high standard, including all of the necessities that holidaymakers will need to reside in the property for a short time. They tend to be in city centre locations or more picturesque locations and attract people who are looking for something different. As such, there is more license to differentiate a property by furnishing it more characteristically or expressively. The furnishing should still be in keeping with the property, however, there is room to use more vibrant colours and unique furniture pieces. |
| Serviced Accommodation | Fully furnished to a high standard. | Although still of short nature, service accommodation attracts a different subsection of tenants. However, it is still a prerequisite that the properties are furnished to a high standard. Professionals or residents using serviced accommodation will want more functional, modern décor. Given the variety of professionals who may be looking for serviced accommodation, it is worth opting for more neutral and mass-appealing furnishings that appeal to the broadest possible audience. That being said, serviced accommodation may need more expressive pieces of art or ornaments to make the property feel more welcoming or homely. |
| High-End Professionals | Potentially fully furnished. | Whilst the majority of high-end professionals may prefer a property to be let unfurnished, there is still scope to let properties as fully furnished, especially city centre flats. However, high-end professionals seeking furnished accommodation will want a higher caliber of furnishings to match their taste. There is room for professional interior design within the property to add real value and appeal to an affluent sub-section of the market. Albeit the market for this is finite and niche. |
| Young Professionals | Fully furnished or part-furnished. | Young professionals seeking furnished accommodation will, on average, want a more comprehensive suite of furniture than high-end professionals. They are less likely to have their own additional furniture to move in, so will want the full complement of storage options. However, such lets should focus on providing affordable, plain furniture without attempting to include personal décor preferences. Most young professionals will want to make the place their own, purchasing or bringing their own soft furnishings, such as rugs and lamps, etc. |
| Students | Fully furnished or part-furnished. | Typically, student accommodation will incur more wear and tear on average than other types of furnished lets. With this in mind, it is worth focusing on providing affordable and replaceable furniture. Landlords should focus on easily assembled and easily disposable furniture throughout the accommodation. Similar to young professionals, the furnishings which are included should be neutral and should leave room for students to put their mark on the property. |
| Foreign Students | Fully furnished. | As they are traveling from abroad, they will expect a more comprehensive suite of furnishings in the accommodation and may be willing to pay a premium for better quality furnishings. It can be worth focusing on fitting out the property with more modern furnishings, including soft furnishings such as lamps and rugs. |
How to Make Fully Furnished Lets Worthwhile
Letting out a fully furnished property can help to supplement the profit landlords can make on a tenancy. However, it is important to take the time to properly work out whether it is right to let your property fully furnished. It is worth calculating the premium in rent that a furnished property will attract versus a non-furnished property and then using this figure to determine how many months the property needs to be let to recover the additional capital outlay.
The first step to working out whether or not it is worthwhile to let out a property fully furnished is to look for comparable furnished and non-furnished properties that have been rented in the local area. These properties need to be as similar as possible to your own and the larger the sample the better. For example, you may find that across five similar non-furnished properties, the average rent is £1,100 per month. Whereas across another five similar furnished properties, the average rent is £1,250 per month, suggesting a £150 premium per month for furnished accommodation in the area.
The next step is working out how much you can afford to spend furnishing the property in question. Whilst it is worth considering the type of tenants you hope to attract, the more affordably you can do this, the better. It can pay dividends to find quality affordable brands which have a range of matching furniture. For larger items, it is always worth checking Facebook Marketplace, eBay, and Gumtree to find good value second-hand furniture. Let us assume it costs £3,000 to fit out the property, with an annual wear and tear budget of 10%. In this situation, it would take 26 months to pay for the furniture outlay. However, depending on the type of tenancy, how it is managed, and what structure your property is held under, there could be additional managing agent charges or tax implications that can reduce the fully-furnished premium and extend how long it will take for your property to break even.
Whilst the above is a basic example, it helps to highlight the additional decision-making processes which should be applied to properties when letting them fully furnished. Is there a gap in the market for furnished property? What premium in rent could you expect to attract? How much will it cost to purchase and maintain the furniture? How long will it take for you to break even on your initial capital outlay?
Choosing The Right Amount Of Furniture for Your Rental Property
If you do determine that it is the right financial decision to let a property fully furnished, the next question you should ask yourself is how furnished you need to make the property. This will entirely depend on the type of tenants that you wish to attract. For tenants with more basic demands, such as young professionals and students, it may be prudent to just include the bare necessities. That is a sofa, table, beds, wardrobes, and a chest of drawers. Such tenants will want to put their own stamp on the property and make it feel more like home. They are usually open to purchasing additional smaller pieces of furniture and soft furnishings to equip the property how they feel is right. In many cases, including too much furniture and soft furnishings could be detrimental to the desirability of the property and inconvenience the tenant.
On the other side of the coin, high-end professionals, foreign students, and shorter-term lets will expect a higher quality and quantity of furnishings in the properties that they rent. It is common for such tenancies to include a wider array of white goods, such as toasters, kettles, and microwaves. High-end professionals and foreign students may expect properties to include additional furniture such as coffee tables, TV stands, bookshelves, lights, and bedside tables. However, they will still want to make their mark on the property and are unlikely to want potentially more personal items such as artwork, cushions, or crockery. This is in contrast to shorter-term lets, who would require properties to be provided in a fully habitable state on day one.
Choosing The Right Type Of Furniture for a Rental Property
There are a lot of considerations that need to be made when choosing the furniture with which to furnish your property. The first and most important is that the furniture is within budget and appeals to your target audience. However, going beyond this, it is worth taking the time to consider which items, styles, and colours suit the property you are furnishing. Doing this can unlock additional value and position your property as being a more desirable and premium option.
One of the worst things any property owner can do is project their tastes and preferences onto the property. Furniture and colours which appeal to you, may not necessarily appeal to others. To make the most of letting a property fully furnished, you need to ensure that the furniture you include appeals to the broadest possible population of prospective tenants. This means opting for plainer styles and neutral colours but leaving room for the tenants to include their personal styling preferences. That is not to say that the furniture should be bland and cheap, it should be clean and in keeping with the property. For example, flats in converted mills may suit modern industrial furniture sets, whilst cottages may be more suited to softer and more classical woods.
Whilst it is imperative that you attempt to stay within budget when furnishing a property. You want to ensure that you are adding value when doing so. It may save you money to assemble a selection of independent second-hand items, however, if they clash too much it may prove detrimental to the rental value of your property. Instead, it can be worth finding affordable online brands which combine cheap prices with reasonable product quality. If you can ensure that the furniture you opt for matches together well and suits the property, you can help to position your property as a more premium and desirable option for tenants, despite not spending much more.
