Is it better to rent furnished or unfurnished?
With landlords being able to command up to 21% more in rent on a furnished flat compared to an unfurnished one, does it make more sense to invest in tables, chairs and sofas for a rental property?
An analysis of the cost of rent on a typical two-bedroom flat conducted earlier this year by property website OnTheMarket looked at nine major cities and found an average two bed flat can be up to £128 more than an unfurnished property.
The research showed the cost of furnishing a flat of this size is around £1,800, calculated based on furniture from IKEA and television from Currys.
With these figures in mind, is it cost effective to swallow the initial financial outlay for a greater yield over time?
There is no catch-all answer to this as there are several variables as to what would work best for individual landlords, including the area the property is located in and the life stage of prospective tenants.
For example, in an area with a large transient student population, furnished properties are likely to be in higher demand.
But in areas with a higher concentration of long-term tenants and families, who are likely to have collected large items along the way, unfurnished properties are likely to be more popular.
There has been a significant drop in furnished homes since the government abolished tax relief for landlords on furnishing properties, according to agents asked as part of the report.
Landlords can no longer claim a 10% allowance of the net annual rent for wear and tear of furnishings, such as cookers, carpets, beds and televisions. Instead, the government now allows you to claim tax relief on replacing ‘domestic items,’ with the emphasis on replacing – you can’t claim tax relief on the cost of furnishing a property for the first time.
With this in mind, many landlords are opting to buy more comprehensive insurance policies instead of furnishing properties, such as rent guarantee insurance which protects them against tenants not paying the rent.
And if you do opt to furnish your rental property, make sure your contents insurance cover includes wear and tear and damage of furniture, soft furnishings such as lampshades and curtains/blinds and carpets.
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