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Furnished or Unfurnished, how do you let yours?


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Just wondering how you let your investments.

Furnished or unfurnished?

 

I am guessing furnished is easier to rent and you can ask for higher rents. (assuming decent furniture) 

Downside being wear and tear and replacement costs.

Are you more likely to have a greater turnover of tenants as it is easier for them to move on?

 

I assume that unfurnished is the opposite of the above.

 

Therefore does it boil down to "Replacement costs of furniture v Increased rental?"

 

What are your thoughts?

 

Brian

 

PS  Could be a good podcast topic (if not already covered)

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Hello Brian,

 

I let all my properties unfurnished now. I self manage and have found if you have a reasonable size portfolio it really does cut down on issues and saves you a lot of time and money in the long run. Depending on the rental area you may get a little higher letting furnished but I have found providing furniture etc, repairs cancel's this out.  I also mainly let to LHA clients where the rental income is set so no real point in furnishing. I do also believe unfurnished lets will let for longer.

 

It does all boil down to the particular demand in an area, type of tenant you are looking for etc - personally unfurnished has worked far better for me.

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The Manchester Meetup takes place on the first Thursday of every month, find out more here

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  • 4 months later...

Brian

 

Lee Moffat on the recent blog post on decorating a btl proper & Brian above both succinctly put the case about furnishing.  From an agent's perspective being the arbiter of what is fair wear and tear and accurately describing starting condition to compare with end of tenancy is a near nightmare as well as discerning how much life is left in each item and therefore estimating a proportionate value means that I actively discourage furnished and do not see that you would lose much income from it.  There are special cases such as student lets, but the excessive rents charged probably cover costs of management and replacement but it woudl be interesting to see by how much.  There are now so many specialist student companies with ever increasing standards and even pickier students I would not recommend going into student letting until reasonably seasoned.  Two of my offspring have been through university and I have seen to my shame the state of their houses at the end of each year and have more than once flogged 4 relatively inert and uninformed youngsters into sufficient activity to return the property to the landlord in a decent condition and showing them really what standards are.  It did enable the return of deposits largely intact and my family honour redeemed!

 

It is worth noting that deposit arbitration services are increasingly picky on the standards of inventories and how thorough they are.  Be warned that poor inventories frequently result in cases being found in favour of the tenant through lack of evidence and this is also reflected in cases too.  A much easier route is to supply unfurnished with only a cooker and any integral white goods that came with the property.  Remember that any electrical items left require a PAT (portable appliance test) certificate on each plugged unit carried out at least bi-annually with a documented visual check each year/ new let inbetween.  You also have to replace like for like any item that breaks down if it was in place at the start of the tenancy as this is deemed part of your contract with the tenant - hence the bare furnishing preference for my landlord's properties.

 

Regarding Chris' comments on "what constitutes a furnished let" - the re are no hard and fast rules and it varies from the full up holiday cottage style - everything down to cutlery and washing basket to much more spartan bare basics.

 

The minimum I would suggest is to appropriately fit out each room with the basic furniture expected in each room:

 

Bedrooms - Bed (double or single depending on room size). mattress with appropriate protective covers, drawers unit, wardrobe (either fitted/ built-in or free standing) side cabinet + appropriate curtains/ blinds

Lounge - Settee + armchairs to fit room size, coffee table

Dining Room / area - A dining table + 4 chairs (located where appropriate depending on lounge diner/ kitchen diner or separate) Dresser if separate dining room

Kitchen - include white goods to fit spaces - inc fridge freezer; washing machine; tumble dryer; 

 

Depending on the class of customer you may need to tailor the furniture to suit the client but if it screws together with modern fastenings, unless top end gear, they rarely last the distance - so traditional furniture of solid wood construction is worth the initial outlay to gain the most longevity.  The higher up the market you go the more discerning they are and the less likey they are to put up with tatty or "well-used" pre-owned furniture and so it will raise to underlying costs.

 

My advice is to spend the money of making it look well decorated and carpeted and let the tenants furnish it to their tastes - and take it away with them ;)

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Hi Brian,

I use a combination of furnished & un-furnished properties in my portfolio for 3 main reasons.

1. You'll want your property to appeal to the broadest market. I've been known to remove furniture from a property where a prospective tenant is downsizing from a 4 bed house into a 1 bed flat and added a dinning table, sofa & bed to secure a long-term corporate let from Malaysia.

2. You can claim 10% of the net rent as a ‘wear and tear allowance’ for furniture and equipment you provide with a furnished residential letting. Net rent is the rent received, less any costs you pay that a tenant would usually pay (eg Council Tax). Hopefully your property is cash flow positive (returns a profit after deducting all costs) and so avoiding 10% tax on your net rental income EVERY YEAR is likely to be worth more to you over time than a one time outlay on a piece of furniture.

3. I use a dedicated firm to produce a photographic inventory (~£50) at the start and end of each tenancy which the tenant must be present for and sign. Providing you have correctly protected the tenants deposit with a government backed scheme, it's simple to claim for damage (different to wear & tear) or loss from their deposit by presenting the before & after inventory.

Side note; make sure any furniture/furnishings you do install into the property are fire safety compliant and would recommend opting for solid, medium to high-end furniture that will last. (Initial cost vs. life cycle cost).

Darren

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It is worth noting that deposit arbitration services are increasingly picky on the standards of inventories and how thorough they are.  Be warned that poor inventories frequently result in cases being found in favour of the tenant through lack of evidence and this is also reflected in cases too.  A much easier route is to supply unfurnished with only a cooker and any integral white goods that came with the property.  Remember that any electrical items left require a PAT (portable appliance test) certificate on each plugged unit carried out at least bi-annually with a documented visual check each year/ new let inbetween.  You also have to replace like for like any item that breaks down if it was in place at the start of the tenancy as this is deemed part of your contract with the tenant - hence the bare furnishing preference for my landlord's properties.

 

I let all of my properties (x3) unfurnished but would be interested to know what The Hub thinks is a reasonable minimum for kitchen appliances.

 

As Tim mentions "a cooker and any integral white goods that came with the property" seems to make sense, but if I have a spare fridge, freezer, washer, dryer, etc. should I consider leaving them in the property or take them away and avoid all the potential costs/issues they may incur.  Do many modern tenants expect these sort of items to be provided?

For all other rooms I'd say decent flooring and light fittings are all that's required.  See also the post by Lee Gordon Curtains & Blinds For New BTL

 

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@andyn180

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Andy

 

Any white goods that you supply must have a Portable Appliance Test (PAT) carried out bi-annually with a visual check in between tenancies and also any supplied appliance is considered as part of your letting contract and therefore needs to be replaced like-for-like if it breaks down during the tenancy.  Hence the reason I reckon to encourage landlords to let as bare as possible.  For some reason these items rarely last as long in tenants hands as they do your own and apportioning fair wear and tear is an increasing nightmare the more goods you leave.

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Chris 

Basically yes - there will be some geographical and people group variations - but most of my tenants come with their own white goods or get them after moving in.

We do not see too much of a premium for part furnished properties and from a landlord or agent's perspective a bare property is easier to account for and create condition and inventories for.

 

It is rare for me to wait long for tenants and the brochure/ online information clearly indicates the furnished state of the property.  There are some tax advantages for supplying furniture (see above) but I am yet to be convinced this is materially worth it given the hassle associated with supplying, monitoring and replacing.

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We classify our unfurnished including floor coverings, window dressing, light fittings, bathroom fittings and white goods in kitchen. We find unfurnished tends to attract longer term tenants who want to make the place their home. Fully furnished generally attracts transitional tenants

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  • 2 months later...

I may be the last to notice, but what bozo decided to take away tax relief on replacing old cookers and fridges, now we are supposed to get them repaired.

 

I cannot even work out if an integrated fridge or cooker would still get relief.

 

Do they think we replace the appliances because we like shiny new stuff (rather than happy tenants and less hassle for all)

 

Clowns...

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Chris

This change was in the small print of the last Budget by George Osbourne!  From my understanding form other blogs elsewhere, the upshot is that if the property s let largely unfurnished - ie not a full set of bedroom, lounge, dining and kitchen etc then you will not be able to claim for replacement of white goods.  Many let unfurnished with only white goods included - but this is specifically prohibited.

If the appliances are integrated into the fitted kitchen replacement is deemed a repair and is still permitted.

I have also seen various postulations about renting the white goods to the tenants as a separate deal but I have not seen a response to whether the HMRC will allow this.

See

 http://www.tax.org.uk/tax-policy/newsdesk/2014/Press_release_tax_break_23_May_14 

 

for the fairly detailed view or

 

http://www.martinco.com/lettings-agents/sutton/news/tax_relief_on_white_goods-9157

for the more layman's version.

 

I can see that the problem will be for existing tenants with white goods supplied as you would still be expected to replace irrepairable items during the tenancy as they were there at the start, but you will no longer be able to claim them as tax relief.

When you start a new tenancy you may consider removal as the most cost effective alternative!

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  • 4 weeks later...

Combination. Some houses empty, some furnished.

 

 

If it's "rooms" then it's furnished. You will always get a house/room where someone will want to move in with their own stuff or want a mix. So, a bit of storage somewhere else is useful ! I've got a lock up with beds and tables in ! Ok and a load of building tools

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I let my own properties unfurnished, and all the company properties i oversee are let unfurnished, with the exception of 3. Two are student lettings, so its a requirement, and one is a corporate let.

 

The student letting furniture i bought from Ikea. It might be expensive for the quality, but it seems to stand up fairly well, and if i need to replace one part, it'll match with the rest. As was previously mentioned, gone are the days of 'Rising Damp' student lettings. They also obviously include white goods, cutlery etc.

 

Unfurnished to me means only including floor coverings ( carpets etc), and normally a built in oven, with hob and extractor. In private rented property I never include washing machines, dryers, or free standing cookers, due to the expense, and the maintenance issues. 

 

I have zero experience with HMO (other than the student stuff, so not really the same), and i expect they would have to be furnished. I can't imagine id be spending much money on the furniture for bedsits though.

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Ive only ever furnished two student flats. Ikea seemed to be on a par price wise with anywhere else, and as i said above, i was thinking more about being able to replace single items rather than all the furniture in future ( students can be picky, and mismatched furniture could make them choose another property.)

Its extremely rare i would put white goods in a property- the exceptions being the student lets, a couple of newer properties which came with them, and we provided a cooker to one tenant who genuinely couldn't afford one. ( she was nice though)

rob

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Nick & Rob

 

We have noticed that properties without a cooker / hob + oven tend to have significantly longer void periods than when supplied but white goods have less of an impact.  If a mid-range item is purchased these tend to last a longer time and are value for money.  It is also worth noting that if they are integrated units these are still permitted to be replaced under current tax rules but stand alone ones are not.  My experience also indicates that white goods have a much shorter shelf life than cookers and providing the cookers are properly cleaned at the changeover of each tenancy (at the tenant's expense ;) ) then they can,and do, last as long as a boiler.

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