To furnish or not to furnish? Renting out property in London

Deciding whether to furnish their rental property or not is a dilemma for many overseas landlords in London when seeking tenants. While there are pros and cons to doing both, you should know what to expect if you choose to let your property with furniture.

What does “furnished” mean when you rent in London?

“Furnished property” is a broad term and can mean many things if you get into the specifics. However, in simple terms, it means providing all the necessary items like beds, sofas, wardrobes, dressing units and dining tables, etc, for comfortable living. Some landlords even offer kitchen appliances, cutlery and cookware as part of their home set-up, while those looking to take it up a notch add window dressings and other aesthetic upgrades to their properties.

What type of tenants prefer furnished homes?

Temporary residents in London, such as corporate professionals with a limited-period transfer or overseas students, typically choose fully-furnished homes to avoid the hassle and expense of buying new furniture. Individuals with hectic schedules seeking a cosy retreat after work prefer not to spend time or money shopping for furniture and other essentials, as they aim to move in with just their suitcase.

Furnished vs unfurnished: Which one offers better rental yield?

Asking rents for furnished properties are usually higher than unfurnished ones, and according to multiple research findings, landlords of fully-furnished properties can earn up to 20% or more than similar unfurnished properties in the same area. However, it is essential to factor in the cost of furnishing and be ready to wait for one or two tenancies before recovering the investment and making real profits.

Landlord costs: What does it take to furnish a rental property?

Furnishing a rental property requires investing in high-quality, durable furniture to ensure tenants get what they expect and can live comfortably without any worry. Buying furniture directly from retailers can be expensive, and landlords may not know exactly what tenants are looking for. To make it easier to decorate your home, we work with a professional furnishing partner, InStyle Direct, who can provide design-led furniture packages that match your property and tenant profile for as little as £3,995 plus VAT.

Pros and cons: Furnished vs unfurnished rentals in London

Like most critical business decisions, there are a few pros and cons to offering both types of rental properties.

Furnished property pros:

i. Higher asking rents for the extra convenience and comfort
ii. No need to move things out for pre-furnished properties
iii. Tax discounts for expenses on furnishing
iv. Higher tenant demand from corporates and professionals with fewer voids

Furnished property cons:

i. Higher investment to buy good-quality furniture
ii. Maintenance costs to fix wear and tear
iii. Coordinating installation, delivery and aftercare

Unfurnished property pros:

i. No need to spend on buying new furniture
ii. No hassle or time spent getting it right and meeting tenant expectations
iii. Certain tenants, especially families or locals, may have their own furniture and look specifically for unfurnished units
iv. Higher chances of securing longer tenancies

Unfurnished property cons:

i. Lower asking rents compared to furnished properties
ii. Smaller pool of tenants that generally look for unfurnished homes in London
iii. Higher chances of void periods

What to consider when deciding between a furnished or unfurnished rental property?

Whether you choose to rent your London home furnished or unfurnished should depend on your letting strategy and factors such as the property type and neighbourhood. For landlords with properties in thriving business and financial districts like Canary Wharf, Westminster, Nine Elms, and the City, where there is massive demand from working professionals, letting a furnished home can attract more tenants.

Alternatively, if you own a family house and are looking to secure long-term tenancies, providing an unfurnished space may be easier to let and more cost-effective.

How the right lettings agent can help?

Regardless of what’s your letting strategy, the right agency partner will help you achieve your investment goals. With over 65 years of lettings experience in London, Benham and Reeves have helped thousands of landlords to maximise rental income with the correct guidance, including furnishing and interior design solutions.

Our range of lettings and property management services helps overseas landlords, homeowners, and investors stay up to date with local laws and property trends in the UK. You can contact us to learn more about furnishing and styling your London property.