What is a furnished rental property?
Although the terms ‘furnished properties’ and ‘unfurnished properties’ seem relatively self-explanatory, these definitions and what they include can vary. Purpose-built properties nearly always have integrated white goods and kitchen appliances such as a fridge, cooker and oven, whether they are furnished or not.
Typically, ‘furnished’ properties in the UK include all the basic furnishings, such as beds, mattresses, sofas, wardrobes, dining table and chairs. As many investors who furnish their properties today choose a furniture package, future tenants can usually expect soft furnishings too, such as a coffee table, bed cushions, a rug and a TV cabinet.
‘Unfurnished’ properties offer no furniture at all, meaning the keys are handed over to the tenant with the expectation to supply their own furniture. Some landlords choose a ‘part furnished’ option, offering only the fundamentals such as beds and wardrobes.
The benefits of a fully furnished property
Furnished rental properties can add huge value to your investment. We’ve outlined some of the key benefits below:
1. Higher rental yields
For furnished property, landlords can charge a premium of around 15 – 20% more – sometimes even more for premium furniture. Although there is an initial start-up cost involved to buy the furniture – usually around GBP 2,000 – GBP 4,000 for high-quality packages depending on the size of the apartment – investors can make their money back over time through higher rental yields and fewer vacant periods.
2. Appeal to specific tenants
Fully furnished properties are an appealing prospect for young professionals and post-graduates who don’t own furniture or have the start-up costs to source it themselves. As this is the prime demographic of the Build-to-Rent sector, supplying furniture directly caters to market demand.
3. Furnished rental properties are in higher demand
Accommodating a flexible lifestyle, furnished properties in prime city centre locations are in higher demand among renters. Reflecting this demand, in Manchester city centre (M1 postcode), 95% of rental properties are furnished. This percentage is also reflected in our own developments; with our latest completed Affinity Living development, Riverview, 96% furnished.
4. Ease of transition into new accommodation
Tenants can quickly and easily move apartments without considering moving-in logistics and costs, meaning less hassle and quicker contract exchange. Ultimately, quicker move-ins means fewer vacant periods.
5. Easier to let
Furnished properties are generally easier to let after a viewing, as prospective tenants can visualise themselves living in the furnished property as opposed to viewing an empty space. Providing the furniture is modern, tasteful and clean, a furnished property has more appeal and wow-factor to potential tenants.
The benefits of unfurnished properties
While furnished properties are in higher demand and can generate stronger yields, the decision largely depends on the investor’s personal preferences, target audience and budget. There are benefits to unfurnished rental property:
1. Initial costs are considerably less
It goes without saying that start-up costs are considerably less if you choose to leave your property unfurnished. In the more premium market, fully furnishing an apartment with high-quality, durable furniture hand selected by an experienced partner costs between GBP 3,000 – GBP 4,000.
2. No damaged furniture or replacement furniture required
Providing furniture to tenants always comes with risk of damage or replacement. Although furniture companies offer durable options for this reason, wear and tear is inevitable. Wear and tear is far less of an issue in an unfurnished property, as investors can easily organise to have the apartment cleaned and repainted if needed once the tenancy ends.
3. No need to insure any furniture
Keeping costs down again, you won’t need to pay to insure furniture. If you do decide to furnish your property, it is a good idea to get it insured for theft and damage.
4. Appeal to a specific target audience (longer tenancy periods)
An unfurnished property will typically attract more mature tenants who may have built up a collection of their own furniture, meaning they are usually more settled in their lives and want to stay in the rental home for longer. Tenants wanting an unfurnished property also usually want to make it their own, making them more likely to form an attachment to the property and rent long term.
How to furnish your rental property
So how do you go about furnishing a rental property? Some investors choose to furnish the property themselves, buying individual items of furniture and either assembling it themselves or paying a third party.
For purpose-built apartments – the most lucrative residential property type – it is more common for investors to work with a recommended supplier to provide a furniture pack. Providers can offer tiered options with different styles and price points.
Not only do these providers know the types of furniture tenants are looking for, but they also produce durable, timeless pieces fit for purpose. Ideal for more ‘hands-off’ investors or those overseas, furnishing partners offer an end-to-end service to remove the hassle from the process.
If you are considering furnishing a property yourself, there are a few things to be aware of:
- Make sure you adhere to fire safety standards
- Establish a budget and factor this into net return
- Choose the colour scheme wisely – avoid bold, brash colours that are difficult to match with
- Choose timeless pieces rather than fashion trends that will date
- Ensure the furniture is durable, fit for purpose, and easy to clean
- While your furniture should be high quality, make sure you don’t overspend
- Consider insuring your furniture
At Select Property Group, we offer the finest residential property investments in the market. With current opportunities in investment hotspots, Manchester and Birmingham, we help investors achieve their financial goals through UK property.
Get in touch today to speak to one of our consultants about how UK property can work for you.