The Cost Difference between Furnished and Unfurnished Apartments
Unfurnished apartments comprise the majority of the apartments on the market, but it is possible to find furnished apartments. Furnished apartments, however, cost more than unfurnished ones for several different reasons.
Investment in the Furnishings
Offering a furnished apartment requires that the landlord have purchased furniture, dishes and other items to put into the residence. This means that the landlord will have expended funds to outfit an apartment for a tenant. To recover this cost and to protect himself should items need repair or replacement in the future, the landlord will increase the rent. Typically, this cost will be divided equally over the length of the lease.
The Likelihood of Short Term Rentals
Furnished apartments are often rented short term, typically no more than six or nine months. This is because a resident intending to live in the apartment longer will want to use his belongings to outfit the space. Short term leases are more expensive than long term leases, usually by at least $200.00. This extra cost derives from needing to clean, repair, list and release the apartment more frequently than in a yearly lease, the typical lease length.
Protection against Depreciation or Repairs
Despite your dedication to maintaining the furnishings provided by a landlord, not all tenants will behave the same way. This means that, potentially, a landlord could be faced with damaged or broken furniture needing repair or replacement at the end of a lease. To maintain his investment in the furniture and continue renting the apartment with furnishings, the landlord must charge more in rent.
Inclusion of Utility Costs
Many times, in short term, furnished rentals, utilities will be included in the rent. Rather than require the tenant to set up and maintain individual utility accounts only for a few months, the landlord will create the accounts under his name and estimate the amount of the tenant’s usage of each utility. This estimation will then be passed along to the tenant in the amount of rent charged. Note that this is not universally true and may not include all utilities but just the basics such as water, electricity and gas, if any.
It is unusual for a furnished apartment to be found in a smaller apartment complex. Usually, furnished apartments are located in multi-story buildings or large apartment complexes because the management companies for these structures are able to better shoulder the expense of purchasing or renting the furniture to create a furnished apartment. These larger buildings will have more amenities and possibly be more like a hotel than an apartment complex. Concierge, dry cleaning delivery and other amenities are a few examples of what these larger buildings may offer. Covering the cost of these additional amenities will be passed on to tenants. Additionally, such larger management companies generally charge higher rents than smaller buildings or complexes. Because they offer more amenities and on-site maintenance and other caretakers, these buildings charge more. Furthermore, they are less likely to be willing to negotiate, since demand for such apartments remains relatively steady given the ease of finding the building and the company’s reputation.
What’s better to rent, furnished or unfurnished apartments?
Weaving through them could weigh you down; should you go with furnished or unfurnished apartments? Since there is a huge market for apartments, it shouldn’t be that hard to find exactly what you’re looking for.
Understanding the differences between furnished and unfurnished apartments is important. Each type of apartment comes with plus or minuses.
Furnished apartments are available for a multitude of purposes ranging from corporate housing, long-term or short-term stays. Some are all inclusive and contain everything a bed, sofa, appliances and also plates and cutlery. Detail oriented units may have a housekeeper that cleans the apartment or washes sheets and towels on a regular basis. Occasionally, interior designers are hired to match together the furniture, artwork and other décor for furnished rentals.
*Not all apartments are like that however, most furnished rentals may only have the bare necessities. Some just consist of a couch, bed, fridge, stove, TV, etc.
Plus for furnished apartments
Renting a furnished apartment allows you to move in sooner and easier. There is no need to cart clunky cabinets or couches.
Minus for furnished apartments
Furnished apartments cost more to rent because of all that is incorporated. The style of furniture may not interest you, and is used by others. There is a risk that furniture might get broken or dented, and if so, the renter is dependable.
Apartments that are considered unfurnished will not include furnishings, beds, couches or anything else. Some unfurnished apartments come with a fridge, stove, dishwasher or perchance a washer and dryer combination.
Plus for unfurnished apartments
Renting an unfurnished apartment gives you the liberty to beautify it any way you like. You can modify the wall colors, add memorable artwork and pick out your own items. Whereas, you won’t have any concerns about causing damage to the owner’s property.
Minus for unfurnished apartments
Unfurnished apartments can cause frustration if you have no patience for furniture shopping, or have no idea how to embellish the space. Furnishing an apartment requires lots of time and money. Not to mention, bringing in bulky buys can be a bother to deal with. You would have to move everything in and then once your lease is terminated, you’d have to remove it.
For the best furnished rentals in Toronto, call SkyViewSuites or visit them at www.torontofurnishedrentals.com.
Furnished or unfurnished?
When it comes to maximising your potential income from your investment property, one decision you’ll have to make is whether to lease it out furnished or unfurnished. This is a key question facing investors, yet there is no right or wrong answer, as it largely depends on your market and current demand.
As an example, over the past few years in inner city Sydney, there has been growth in the number of investors who choose to furnish their apartments, not just for a higher financial return, but also for practical reasons – with many choosing to live in the property between tenancies.
Interest lies in unfurnished properties
Overall, there is much more interest in unfurnished properties in this market; around 75 percent of my clients who are looking for a lease property will ask for an unfurnished place that can be fitted out to suit their taste and style. Generally, unfurnished tenancies are longer-term leases with minimal vacancy and wear and tear.
However, good quality unfurnished apartments available for lease in the inner city are getting harder to come by with close to 85% of apartments sold in this market over the past year have been to owner-occupiers.
If you do decide to furnish your property to lease, there are a few key things you will need to consider:
Furnished properties generally have a shorter lease term – usually between 3-12 months – so you need to factor in a higher turnover of tenancies, which means increased possibility of vacancy and more frequent leasing fees.
If you are going to furnish your property, it needs to be done well. Your apartment needs to be beautifully styled and warm and inviting. It also needs to be fully equipped; it’s easy to forget the smaller details like kitchen utensils, vacuum cleaners, linen, and so on.
Monitor all your furnishings and ensure that your entire inventory is well maintained. Items should be replaced promptly if they are not working. Most properties need an update of furnishings or restyling every 3–5 years
When furnishing an investment, you need to be aware that although you may receive a premium of between $100-$250 a week for the furniture; once you have factored in the probable vacancy due to the shorter-term leases, the maintenance of inventory items and extra agency fees – you’re likely to achieve a better return on an unfurnished property.
In saying this, if your investment is more of a lifestyle choice and you’re able to use your city pad in between tenancies, then enjoy!
advantage and disadvantages of furnished apartments
Whenever you are going to rent an apartment you face yourself with a crucial dilemma:
furnished or unfurnished? Find out here the advantages and disadvantages of both options.
Furnished: the advantage of renting an apartment that is already fully furnished is that you don’t have to worry about buying new stuff and you can save some valuable time. On the other hand, you can find the main disadvantage on the price of your rent.
The price of renting an apartment that is fully furnished is considerably higher than renting an unfurnished one. And another disadvantage is that although you may like the department, the location and the price, maybe you dislike the furniture! Every landowner has his or her own style and sometimes you can find decorations that are diametrically opposed to your own preferences.
Unfurnished: the main advantage is that the price of the rent is lower and that you CAN buy the furniture you like.
But the disadvantage is that you HAVE to buy it! Buying all the necessary items to equip an apartment can take time and can be expensive.
Probably one of the best options is IKEA. There you can find almost everything (from a bed to a knife).
To fully furnish an apartment (bedroom, kitchen and living-room) by buying all the stuff from IKEA can cost you between £1.000 and £2.500. It all depends on your style and the amount of money you can spend. Another option is to buy some stuff from the local charity spot. There you can find nice furniture with reasonable prices.
Masters or PhD: the decision of choosing to rent a furnished or unfurnished apartment is strictly related to the time you are going to spend in the UK (apart from your budget, of course). Are you going to equip an entire apartment to live there only for a year? Remember that two months before going back to your country you might wan to start thinking in re-selling your stuff to gain some extra pounds. And that takes time and effort. It seems to be more reasonable to rent an unfurnished apartment if you are going to stay for 2 or 3 years!
Furnished or Unfurnished Apartment?
Whether you’re renting your first apartment or just moving on up, you might ask yourself a question that many renters face:
Furnished or unfurnished? Furnished apartments are far less common, but it might be the right choice for you if you’re a student, a traveling professional, or you just don’t want the hassle of buying and moving furniture.
Furnished apartments usually come equipped with furniture,
basic kitchen appliances and tableware, bathroom necessities such as a shower curtain, a washer/dryer set, and possibly a few other amenities. The exact items will vary depending on the landlord and what kind of place you’re renting. Here are a few pros and cons to consider before you decide if furnished or unfurnished is right for you.
Furnished apartments: The pros
1. Moving will be a breeze. If you’re a frequent mover, you definitely want to keep your stuff to a minimum. Renting a furnished place means you won’t own most of the big items in your place, and it’ll be easy for you to pick up and move on short notice. Bonus: You’ll never experience the joy of moving a couch up a flight of stairs.
2. You’ll save money on buying furniture. Be careful, though – furnished apartments often cost more per month than unfurnished places, so you’ll have to do the math to see if you’re really saving money. It might pay off in the long run to just buy your own furniture and rent an unfurnished place. But if you don’t want to own furniture, this is a way to get out of buying your own stuff, but you’ll still have a place to sit.
3. They’re good in a time crunch. Ideally, if you’re searching for a new apartment, you should measure your existing furniture and then pick a place that will fit your stuff. This can be a problem if you’re relocating on short notice, or if you’re moving across the country and can’t make the trip to see your new place in person before moving day. A furnished place takes the hassle out of moving in a time crunch – all you have to do is show up.
4. Sometimes you can get a shorter lease. Most furnished apartments won’t require a year-long lease, since they cater mostly to students and traveling professionals who don’t stay in one place for too long. If you’re not ready to commit to one place for too long, a furnished apartment might be for you.
Furnished apartments: The cons
1. Your rent and security deposit might be higher. Unlike an unfurnished apartment, when you rent a furnished place, you’re not just renting some empty rooms – you’re renting all the furniture and amenities that are in them. Your landlord spent money to equip that place, so of course that cost is going to be passed on to the renter.
2. You face a higher liability. In an unfurnished place, you might not get your security deposit back if you accidentally bust a hole in the wall or your kid draws all over the walls with crayons. In a furnished place, you have to consider the furniture as well. Did you tear the upholstery in the couch? Scratch the dining room table? That stuff doesn’t belong to you, so you’re going to have to pay to get it fixed. Better be careful!
Tip: Take a video inventory of everything the landlord provides in a furnished apartment before you move in. Take note of anything that’s broken. That way, you’ll have indisputable evidence if your landlord tries to charge you for something you didn’t break.
3. You’ll have no control over most of your décor. If you don’t like the couch in your furnished apartment, tough. You could go out and buy a new one, but you’ll have to figure out what to do with the old one, and you’ll have to make sure it’s OK with your landlord. You can hang art on the walls and add other personal touches around the place, but you won’t have complete control over the look of your apartment.
4. You’ll have fewer apartments to choose from. Furnished apartments simply aren’t as plentiful as unfurnished places. You won’t have as many choices when you look for a furnished pad, but they’re out there if you’re up to the task.
Buying all the furniture for a property can be a major expense. Should you go ahead, or is it best to let tenants bring their own furniture?
The first thing to understand is that there are no strict rules guiding whether a landlord should furnish a property. It's completely up to you whether you offer it with nothing but bare walls and floorboards, or every possible kind of furniture, appliance, tools, kitchenware, bathroom scales and magic lanterns.
Nevertheless, the decision to let a property furnished or unfurnished will make a difference to your chances of finding a tenant and the kind of tenant you will attract.
The positive things about furnishing a property include:
It saves tenants money, since they don't need to buy furniture
You may let the property more quickly than an unfurnished property, because (generally) there are more tenants looking for furnished lettings
When the tenancy ends, you will still own the furniture and can use it yourself, or offer it to future tenants
You can deduct a percentage of the cost of the goods from your tax liability
The positive things about letting an unfurnished property include:
Tenants who buy their own furniture may stay for longer periods, since they have made an investment and moving could be complex and expensive
Tenants may be happier with their own furniture and less problematic for you
You are not responsible for insuring tenants' furniture or any other items they bring into the property
You have no concerns over wear and tear if the property is let unfurnished
A third option is to let a property part furnished, which is a term completely open to your interpretation. You could put in everything except beds (since many tenants have their own beds) or you could show the property to potential tenants, offering them the choice of whether to have additional furniture or not.
Lettings agents favour this option, since it gives the greatest flexibility and therefore makes it easier to find tenants. Ideally, there should be enough furniture that the property looks 'lived in' and functional, but not so much that the place is cluttered. Having too much of a landlord's furniture crammed into a property is off putting.
Some landlords have a range of properties, allowing them to spread their furniture around. Others hire warehouse space to store furniture in case it is needed in future.
In general, landlords with larger apartments or houses tend to let them unfurnished, since tenants are likely to be older and may have families, along with their own furniture. Smaller properties are more often furnished and attract younger, more mobile tenants.
You are not legally obliged to take out contents insurance on the furniture and other items in a tenanted property, but you are well advised to do so.
A common practice is to hire an inventory agent who will make a detailed list of everything in the property before the tenancy starts.
When the tenancy ends, the agent will return to check that everything is still there and make a note of any damage or wear and tear. There are rules of thumb guiding how much a landlord can charge a tenant, for example for stains on carpets or chipped crockery. You are not allowed to charge tenants the full cost of replacing items suffering from normal wear and tear.
See the Association of Residential Letting Agents information pages for more details.
Not all insurance companies offer insurance for tenanted properties and those that do will commonly charge a premium over contents insurance for your own (non tenanted) property. And if your property changes status, from owner-occupied to tenanted, it is the landlord's responsibility to inform the insurance company. Otherwise a future claim could be invalidated.
Lettings agents recommend that you carry out a Portable Appliance Test, which ensures that all your electrical goods are in good order and are safe. This is not a legally required lest, but is helpful to assure potential tenants that you take their safety seriously.
Furniture, however, must conform to the legal fire resistant standard - all fabric furniture such as sofas and armchairs must have labels proving that they meet this standard.
Council tax exemptions
There are two types of council tax exemptions that you can apply for, regarding unoccupied properties:
Class C exemption applies to unoccupied, unfurnished properties. The exact level 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.
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.
Contact your local council tax information office to get specific details of what discounts apply to your property.
Income tax issues
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.
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.
See the Revenue & Customs wear and tear guidelines for more details of how to claim the allowances.
Some lettings agents think that they can achieve slightly higher rents from furnished property than unfurnished - somewhere between 5 and 10 per cent - but most argue that flexibility is key. The best thing is to offer whatever arrangement meets the needs of your customers.
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