Landlords: furnished or unfurnished rentals?

There is no legal definition of ‘furnished’ or ‘unfurnished’ rentals in UK law, but your choice to furnish your rental – or advertise the availability of both options – will impact your rental in other ways. While many think that a furnished rental will represent a higher earning, there are different fiscal implications for both options.

As a landlord, choosing to offer a furnished rental instead of an unfurnished property will most likely impact the length of the lease.

When renting an empty property, it is more likely that the tenant will stay for a longer period, as they will be more invested buying furniture and decorating the property. Furnished lets are more popular with students and short term renters, and so are more common in regions with a high turnover of residents. Most HMOs (House in Multiple Occupation) are furnished, as renters in one household may not know one another and will expect to share furniture.

Whichever type of rental you choose will affect your finances and taxation – here are a few differences. You should do your own research on the specific regulations in your area. • Furnished rentals: Since 6 April 2016, you can claim ‘replacement domestic item relief’ - the net cost of replacing an item of furniture – which replaces the ‘wear and tear allowance’. You are not obliged to take out contents insurance, though it is highly recommended. Find out more on what is allowed on the government site. You must also ensure that your insurance covers tenanted properties. You should also take into account the costs of repairs and maintenance of the furniture which you will have to undertake and pay for. • Unfurnished rentals: unfurnished properties can be eligible for reduced council tax during unoccupied periods up to 6 months. Some councils do also offer smaller reductions for unoccupied furnished properties. You will not have to cough up for wear and tear or damage to furniture. You may choose to provide certain ‘necessary’ items such as white goods, but leave the rest of the property unfurnished for your tenant – consider any costs linked to the maintenance of these items.

Taxation and other costs are very significant for property investment and landlords. It is important to also be aware of the market in your area so that you can offer a property that will suit the type of tenants looking nearby. This will help you to avoid periods of the house sitting empty. A studio apartment or HMO in a student heavy area will attract tenants much faster if it is furnished. Conversely, a family looking for a large house or flat will expect it to be unfurnished, so that they can move in their own furniture and put their mark on the property. It is the landlord’s job to adapt to the needs of potential tenants – in the second case, a family is likely to want space for their own furniture rather than the existing furnishings.

Your choice to furnish or not furnish your property may also be dictated by the amount of work required, which can end up requiring a significant amount of time and money.

Post an ad for free

Author: Roomlala