Furnishing a Buy to Let Property Should Landlords Furnish a Let Property or Not

In past blogs we have written about whether landlords should furnish a let property or not.

And really, the answer comes down to what your local tenant target market wants – which is something you should have looked into before you bought the property, right?

To get the level of furnishing right, we recommend testing the extent of demand for furnishings with suitably worded test ads before you even buy the property.

Less Furnishing Usually but Not Always Better

Of course, part furnished or totally unfurnished properties have their advantages.

You’ll definitely get less potential disputes with tenants over inventories (was that table lamp damaged at the start of the let or not?), you’ll have slightly reduced inventory clerk costs, there will be less insurance costs and there will be less things to have to fix when they break.

So, fewer call outs for you, lower insurance costs, a smaller inventory management cost and less disputes. Sounds good?

Also, the less things you provide and the more the tenant brings in, the more likely he or she will be to stay longer – so lower void periods for you and less time (and money) spent having to re-advertise for new tenants.

It looks good, doesn’t it and for the type of properties I let out, I have always gone with a low amount of furnishings – just white goods – or even nothing much in the way of furnishings at all.

Sometimes More Furnishings are Needed

But, there are certainly parts of the market where the tenant will demand more stuff.

Student markets and any large shared house or HMOs is one such market. Short tem more up market lettings is another.

And, of course, you could hardly hope to do well in the holiday let business unless you fully furnish, unless, of course, you want to have some distinctly unhappy campers.

Council Tax and Furnished Properties

An often overlooked implication of furnishing is council tax.

A reader of this blog, David B wrote to me recently saying, “I have recently purchased a second property for letting and I received a demand from the local council for due tax. I told them that the property in not furnished and not habited. They told me that the property has already received a 6month council tax free period before I purchased the property and that I have to pay even if it is not furnished nor inhabited. Is this correct and is there any way I can avoid paying this tax until I finish the refurbishment?”

The answer is that there are two types of council tax exemptions that you can apply for, regarding unoccupied properties.

First, there is a Class C exemption which applies to unoccupied, unfurnished properties.

Council Rules Vary

The problem is that the exact level of discount differs from one council to another – but in many cases it is a 100 per cent discount, running for a maximum of six months.

After the six months has elapsed, if the property is occupied for at least six weeks, then a further Class C exemption can be applied for. So, one option is for Mr. B to move back in and occupy it, but even here it seems that the councils are kind of making it up as they go along. Also, if I was him, I would point out that what happened before he bought it is outside his control.

Furnished Lets

If the property is furnished, you can apply for an ‘unoccupied discount.’ Again, this varies from council to council. Some will offer 10 per cent, others 50 per cent.

The discount runs up to the end of the tax year and you may have to reapply for the following year, after 31 March.

At Rochdale’s local government website it says, “Exemptions can apply when a property is left vacant or unoccupied. Vacant means a property that is both unoccupied and substantially unfurnished.”

What Does Substantially Unfurnished Mean?

But then Rochdale point out that, “Unfortunately, legislation does not provide a definition for ‘substantially unfurnished” – therefore the words have to be taken in the literal meaning.

Most authorities regard a property as “’substantially unfurnished” if there are insufficient furnishings that would allow for someone to live in the property.

People may leave items such as carpets and curtains and maybe an old sofa in the property to make it look habitable and therefore discourage vandals. A visit will be carried out by an enquiry officer to clarify the details.

So, it seems you can expect a visit from Big Brother from the council. (In our patch, whilst I have been told to expect a call from a local authority man with a clipboard, no one has ever viagra without a rx called. Lack of resources maybe or do they just trust me? I don’t know)

Tax

Finally, if you let furnished property, you are permitted to claim an allowance on the tax you pay for letting income, equal to 10 per cent of the “net rent” i.e. the total rent minus charges and services such as council tax and water rates. This is known as a “wear and tear allowance.”

Alternatively, you can claim the net cost of replacing a particular item of furniture, but not the original cost of the item. This is known as a “renewals allowance.”

But you cannot claim either of these allowances for unfurnished property. And you have to decide which allowance you want to claim and stick with it. It isn’t possible to chop and change from year to year, unfortunately.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector and Landlord Information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 25,000 copies sold.

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One comment

  • My brother owns a flat that he is trying to rent out and has come to the conclusion that for him renting it unfurnished works the best, less disputes with inventory and the condition of things.

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