If you are a landlord, you may have wondered whether it’s better to opt for letting out furnished or unfurnished property. Most private rental properties in the UK are unfurnished, but that doesn’t mean there aren’t advantages to letting out a furnished home. In this article, we look at the differences between furnished and unfurnished properties, the benefits and drawbacks of each, plus the tax implications you’ll face. We also look at the best way to insure your properties, including the different requirements for landlord contents insurance.
- What does “unfurnished” mean in the context of UK property lettings?
- How is “fully furnished” defined in the UK rental market?
- What does the term “part furnished” mean?
- What fixtures and fittings are landlords legally obliged to provide?
- Pros and cons of furnishing options
- Contractual and legal implications
- How do furnished properties affect your tax obligations?
Understanding basic definitions
Before we look at the pros and cons of renting out furnished or unfurnished properties, let’s cover some basic definitions.
An unfurnished property is rarely completely empty. Tenants will generally expect a certain level of fixtures and fittings. These generally include a fridge freezer, a cooker, a washing machine, carpets or flooring, curtains or blinds, and built-in items such as kitchen cabinets and bathroom sanitary ware.
There’s no legal definition of “fully furnished” in the UK. However, a furnished property will contain a broader range of fixtures and fittings. These might include beds, a dining table and chairs, a sofa and armchairs, a coffee table, wardrobes and chests of drawers. Some landlords may also provide a microwave, kettle, and smaller kitchen appliances.
A part-furnished property lies somewhere between an unfurnished and a fully furnished one. The landlord will provide a certain number of items, but tenants can bring a certain amount of their own furniture. For example, a part-furnished property might contain a single bed, a sofa, a kitchen table and chairs. The tenant would then provide the remaining things they needed.
In any rental property in England, there are items that a landlord is legally obliged to provide. These include:
- At least one smoke alarm on every floor
- A carbon monoxide alarm in any room with a fixed combustion appliance (excluding gas cookers)
- Working locks on external doors
- Light fittings
- A cooker and hob
- Floor coverings (although exposed floorboards are acceptable if they are safe to walk on)
- A working toilet
- A shower or bathroom
- A sink
- A boiler
While this list is a minimum, many landlords provide items such as washing machines, fridges and freezers to make their properties more desirable to renters.
Now we’ve covered the basic definitions, let’s look at the advantages and disadvantages of letting either a furnished or unfurnished property.
What are the advantages of letting a property as furnished?
The main advantage of letting a furnished property is that you can charge a higher rent. A furnished property will also appeal to certain types of tenants. For example, students and young professionals often prefer furnished properties they can move into immediately. This may mean you can let the property more quickly.
What are the potential downsides of letting a property as furnished?
There are also potential disadvantages to letting out furnished properties. These include:
- The cost of buying, repairing, and replacing furniture
- More complex inventory management
- Disputes over malicious damage or theft
- Not qualifying for full council tax relief during void periods (unfurnished properties are usually exempt from council tax for at least 28 days if they are vacant)
- Your property will be less attractive to people who already have their own furniture
- Potential higher turnover of tenants as they may not feel as attached to the property
- End of tenancy cleaning is more involved
- You’ll need more comprehensive landlord contents insurance
What are the advantages of letting an unfurnished property?
Lots of rental properties are unfurnished. There are good reasons for this – there are significant benefits for landlords. These include:
- Tenants may stay longer if they can make the property more comfortable with their own furniture
- Lower costs because furniture doesn’t need to be bought, replaced, repaired, or upgraded
- There are fewer items to be damaged by the tenant, which can lead to disputes with the deposit
- Not needing to pay council tax during void periods (normally between 28 days and six months, depending on the local authority)
- Lower insurance costs because fewer contents belong to the landlord
- Simpler end-of-tenancy cleaning
What are the potential drawbacks of letting an unfurnished property?
There are also downsides to letting unfurnished property. Most significantly, you won’t be able to charge as much rent as you could for a furnished home. The property won’t be as attractive to tenants such as students or young professionals who haven’t yet accumulated furniture.
Whether your property is furnished or unfurnished, you have contractual, legal, and other obligations as a landlord. These are focused on tenancy agreements, insurance, and safety standards.
How do tenancy agreements differentiate between furnished and unfurnished properties?
Tenancy agreements for furnished and unfurnished properties are very similar. Both set out the rights and responsibilities of both landlord and tenants.
The main difference is that a tenancy agreement for a furnished home will have more detail about who is responsible for the furnishings and their upkeep. You may also choose to stipulate more regular property inspections, and you’ll need to draw up a more extensive inventory.
How do insurance requirements vary between furnished and unfurnished properties?
Whether you let your property furnished or unfurnished, you should, as a minimum, have landlord building insurance. While not a legal requirement, it is usually a requirement from your lender if you have a buy-to-let mortgage. It also gives you peace of mind that your investment is protected should you need to make a claim.
If you have an unfurnished property, you’ll only need landlord contents insurance with a low level of cover. This would insure items such as fridges, freezers, and carpets. You may also choose not to take out contents insurance if there are few items in the property with a low cost to replace.
However, if your property is furnished, you should have more extensive contents insurance to cover items such as sofas, tables, beds, chairs, and wardrobes. You can use our contents calculator to estimate the value of your belongings before getting a quote.
What are the safety standards applicable to both furnished and unfurnished properties?
All rental property is subject to the same safety standards regardless of whether it is furnished. Any home you rent must be ‘fit for human habitation’. In addition, all gas appliances, pipework, boilers, and flues must be safe and inspected annually by a Gas Safe engineer. All electrical appliances must be in a safe condition, and landlords must arrange an Electrical Installation Condition Report (EICR) every five years. These inspections ensure that all fixed electrical parts of a property are safe.
Landlords must also comply with fire safety regulations. As mentioned above, this includes providing a smoke alarm on every storey and fitting carbon monoxide detectors in any room with a fixed combustion appliance. All furniture provided for the property must also meet the fire resistant requirements in the Furniture and Furnishings (Fire) (Safety) Regulations.
For more information on safety standards for rental properties, see our guide to landlord responsibilities.
Having a furnished property doesn’t affect your tax obligations as much as it used to. Until 2016, you could claim a ‘wear and tear’ allowance of 10% of your annual rental income. This has now been scrapped and superseded with ‘replacement relief’. This allows you to claim the cost of replacement items plus the costs of transporting and installing them. You can also claim the cost of disposing of the old item. However, replacement relief applies to both furnished and unfurnished properties, meaning owners of unfurnished properties can also claim the cost of replacing items such as white goods.
As mentioned earlier, furnished properties that are temporarily vacant don’t qualify for full council tax exemption. Depending on your local authority, you’ll have to pay between 50% and 100% council tax for the allowable void period.
For more information, see our landlord tax guide.
There are numerous pros and cons to letting out both furnished and unfurnished properties. From an insurance point of view, you’ll need to consider that furnished properties should have more comprehensive landlord contents insurance. That said, it’s always worthwhile talking to a landlord insurance specialist, especially if you have specific requirements such as listed building insurance or you’re leaving your house unoccupied between tenancies.
If you’d like advice on managing your property portfolio or want to learn more about different elements of landlord insurance, please visit our landlord hub. Alternatively, call our expert team on 01603 216399 today.