Should you take the time and money to add a sofa, bed, wardrobe, TV cabinet, etc to your rental flat? Will it increase your rental yield? We discuss why London landlords should consider furnishing their rentals.
An article from CIA Landlord Insurance has been making the rounds, saying the London lettings market has “the highest proportion of furnished properties in the UK." It also suggests the demand for furnished properties is on the rise.
The price that CIA Landlord said furnished flats would fetch seemed too high to us - we haven't seen evidence of rates as high as they suggest. However, a 2018 report from OnTheMarket suggest furnished flats in London could incur a 9% premium. Foxtons Private Office works with exceptional properties through prime Central London locations, and throughout 2021, there was an average 41% premium for furnished over unfurnished lets (specifically, long lets over £2,000 per week). That doesn't confirm CIA's figure, but it shows why landlords should at least consider a couch.
The benefits of furnished property
The obvious point in favour of furnishing a flat is rent price. However, it's not just about asking your applicants to pay more. It's also about the type of tenant you're looking for. Corporate clients are prized for their high calibre of tenant and budget to pay higher rents, however, they typically require furnished property.
Overseas tenants, short-let tenants and professionals looking for their Central pied-à-terre typically prefer furnished apartments, too. They don't want to waste time and money purchasing, moving in, removing and storing furniture in the city. If you're letting an apartment in an appealing area - the financial district for corporate clients, Wimbledon for a short let during the tournament - and you have the overhead to provide quality, modern furnishings, it may help you earn a premium.
We should say, not all furnishings alike. For instance, prime central properties for high-end corporate clients require a lot more thought than the extra bookcase and odd coffee table. They might provide kitchenware, bed linens, entertainment and decor of the highest quality. So, if you are considering furnishing to achieve a price premium, you'll need to consider the quality, quantity and style of furnishing for your ideal tenant.
Tip: Whatever price point you're looking to achieve, and whatever you're bringing into the apartment, you will need to ensure it all follows the correct safety codes. For instance, all electrical goods need to be tested, and your furniture and fittings need the correct fire resistance labels. If your tenancies are run through Foxtons Property Management, your property manager will help you remain fully compliant.
The good reasons landlords still choose unfurnished
There are some downsides to furnishing a property. You have to consider wear and tear, and add furniture maintenance to your list of tasks whenever a tenant moves out. There’s also potentially a higher council tax discount for unfurnished flats during void periods – so you may want to discuss your decision with your tax adviser.
Furnished flats may bring in corporate clients, but unfurnished flats also attract a coveted audience – long-term tenants. If someone’s planning to live in your rental for multiple years, it’s in their best interest to form a good relationship with you, pay their rent on time and maintain the property. You also reduce the frequency of void periods and check-in/check-out costs.
Unfurnished means one less maintenance requirement during the tenancy, too. This is especially useful if you don’t have a property management company to help, because nobody wants tenants ringing them on holiday about a broken toaster or accent chair.
The Big Question
So, do you furnish or leave it to the tenant? It'll depend on where your property is, the tenant you're hoping to attract, how much money you can spend up front and how much time you can spare on maintenance and compliance. While you’re mulling it over, here are a few more interesting reads for landlords: