Would you consider cutting administration costs, in order to free up more of your budget to furnish your rental homes, if it meant generating more in rental income?
Research from property website OnTheMarket has revealed that landlords providing furnished properties could increase rental yields, earning over 20% more in rent. This study examined the rents of a typical two bedroom flat, both furnished and unfurnished, in nine major UK cities.
These results have highlighted the potential benefits of making savings where possible, in order to increase the number of furnished lets in their portfolios.
In particular, it found that furnished flats can bring in up to 21% (or £128) more than ones that are unfurnished.
On a similar note, Reapit and Dataloft have produced a joint report, revealing that tenants are willing to pay a premium of 10% outside of London, and 16% within the capital, for a two-bedroom furnished flat. For the former option, this equates to an additional month of rent each year. For the latter, this is almost equivalent to two months of rent.
However, we know what you must be thinking – furnishing a property can be costly, despite good intentions to increase earnings long-term. For example, OnTheMarket’s research showed that the cost of furnished a two-bedroom flat could amount to around £1,800. This estimate is based on a property furbished with a sofa, coffee table, bookcase, television, table and chairs, two double bed frames, two mattresses, a desk and an office chair.
Mike Georgeson, founder and chief executive of RentalStep, has commented: “As we can see, landlords offering furnished properties can expect to achieve a premium, with tenants willing to pay more for a home with furniture already in place.
“At the same time, achieving the furnished look can prove to be costly. One way of offsetting this extra outlay and ensuring you can provide furnished homes – which will in turn earn you more rent – is to reduce your admin costs by using the best partners or suppliers.”
“By saving on admin costs, landlords will have more spare cash to furnish their properties and earn more in rent. Given the uplift in rents that a furnished property can bring, it’s certainly in a landlord’s interest to consider this way of letting.”
This can certainly be the case outside of London, where the majority of rental properties come unfurnished. According to the Reapit/Dataloft report, 75% of properties outside of London are unfurnished, and only 25% do actually include furniture.
Looking inside of the London area, however, 60% of lettings are furnished. The majority of these are flats, with only 24% of the houses currently rented in London in 2018 let as furnished. Outside of London, this falls to just 11%.
Georgeson also said: “Outside of London, the vast majority of homes are unfurnished, and landlords could be missing a trick by not offering furnished properties, especially given the premiums tenants will pay for this type of home.
“We appreciate that furnishing a rental property can be expensive, but by drastically cutting admin costs landlords will have more room to breathe and more money to play with.”