When renting out a property, one of the key decisions landlords must make is whether to offer it as furnished or unfurnished. This choice can impact rental income, tenant demand, maintenance costs, and the overall profitability of your investment. Some landlords prefer the higher rental income that furnished properties offer, while others value the stability and lower upkeep costs of an unfurnished rental.
To help you decide, this guide breaks down the benefits and drawbacks of both options, covering rental income, tenant preferences, lease flexibility, and tax implications.
Pros and cons of furnished rentals
Furnished rentals come with furniture, appliances, and sometimes décor, making them ready for tenants to move in immediately. This setup appeals to short-term renters and professionals but it also requires a larger initial investment and ongoing maintenance.
Advantages of furnished rentals
- Higher rental income – Landlords can charge a higher rent for furnished properties since tenants pay for the convenience of a fully equipped home.
- Faster tenant placement – Tenants looking for a quick move-in are more likely to choose a furnished rental, reducing vacancy periods.
- Appeals to short-term tenants – Furnished rentals attract business professionals, students, and temporary workers who need flexible housing.
- Potential tax deductions – Furniture and appliances can be depreciated as assets, reducing taxable income.
Disadvantages of furnished rentals
- Higher initial costs – Purchasing furniture, appliances, and décor requires a large upfront investment.
- More wear and tear – With more items in the property, landlords face higher maintenance and replacement costs over time.
- Higher turnover rates – Furnished rentals often attract short-term tenants, leading to more frequent vacancies and higher management costs.
Pros and cons of unfurnished rentals
Unfurnished rentals do not include furniture, allowing tenants to bring their belongings. These properties appeal to long-term renters, reducing vacancy rates and management costs. However, landlords may need to wait longer to find tenants compared to furnished properties.
Advantages of unfurnished rentals
- Lower upfront costs – There is no need to invest in furniture, which means less financial risk at the beginning.
- Attracts long-term tenants – Tenants who furnish their own space tend to stay longer, reducing turnover.
- Lower maintenance responsibilities – Since tenants bring their own furniture, landlords do not need to worry about repairs or replacements.
- More stable rental income – Longer tenancies mean fewer vacant periods and more consistent income.
Disadvantages of unfurnished rentals
- Lower rental income – Unfurnished properties generally bring in less rent than furnished ones.
- Longer vacancy periods – Finding tenants can take longer, especially in markets where furnished rentals are in high demand.
- Limited tenant pool – Some renters prefer a move-in-ready home and may choose furnished rentals instead.
Related: What is a lodger? Tenant vs lodger
Cost and profitability comparison
From a financial perspective, furnished properties often generate higher short-term income but require larger upfront investments and ongoing maintenance. Unfurnished rentals, on the other hand, offer long-term stability with lower overall costs.
- Furnished rentals: Generate higher rental income but come with higher maintenance and turnover costs.
- Unfurnished rentals: Earn less rent but require fewer ongoing expenses and attract long-term tenants.
The right choice depends on your investment goals. If you want higher short-term returns, furnished rentals may be the better option. If you prefer low maintenance and consistent rental income, an unfurnished property may be the smarter choice.
Related: Setting up emergency funds for property expenses
Tenant preferences and target market
The type of tenant you want to attract plays a major role in deciding between a furnished or unfurnished rental. Different renters have different needs, and aligning your property with tenant demand can increase occupancy rates.
Who rents furnished properties?
Furnished rentals are ideal for renters who need temporary housing or do not want to invest in furniture. These include:
- Professionals and corporate tenants – Relocating employees often need short-term housing.
- Students – Many students rent for 9-12 months and prefer a furnished property.
- Expats and temporary workers – People moving internationally or for temporary jobs usually look for fully equipped rentals.
- Short-term tenants – Tenants between house moves or undergoing life transitions may need a furnished space.
Who rents unfurnished properties?
Unfurnished rentals attract tenants looking for long-term stability and the ability to customise their space. These include:
- Families and retirees – Long-term renters prefer stability and often have their own furniture.
- Tenants who own furniture – Some renters already own furniture and prefer an unfurnished home.
- Professionals with long-term jobs – Those who plan to stay in the same area for a long time.
If your property is in a business district or near universities, a furnished rental may be more profitable. If it’s in a residential area with family homes, an unfurnished rental might be the better fit.
Lease terms and flexibility
When it comes to rental agreements, flexibility can make all the difference. The lease length you offer will shape the type of tenants you attract and how often your property is re-let.
- Furnished rentals usually come with shorter lease terms—often between 6 and 12 months, with some landlords offering month-to-month options. This setup works well for tenants who need temporary housing, such as professionals on work assignments or students.
- Unfurnished rentals typically have longer lease agreements, starting at 12 months or more. These longer-term contracts can offer more stability for both landlords and tenants, reducing the need for frequent re-letting.
Your ideal lease length depends on your goals. Do you prefer the flexibility of shorter-term tenants or the consistency of longer leases?
Vacancy rates and tenant turnover
Keeping your property occupied is key to maximising rental income, and the type of rental you offer can influence how often tenants come and go.
- Furnished rentals tend to attract short-term renters, which can lead to more frequent turnover. While this means more changeovers, these properties can often command higher rents to balance out vacant periods.
- Unfurnished rentals generally appeal to tenants looking to settle in for the long haul. Longer tenancies mean fewer vacancies, lower marketing costs, and less time spent finding new renters.
Both options have their perks, it all depends on what works best for your property and the market demand in your area.
Legal obligations and insurance considerations
Furnished rentals come with additional legal and insurance responsibilities compared to unfurnished properties.
- Fire safety regulations – Furnished properties must comply with fire safety standards for all furniture.
- Insurance coverage – Furnished rentals require comprehensive landlord insurance to cover furniture and appliances.
- Unfurnished rentals – Have lower insurance costs, as landlords are responsible for the property structure.
Landlords offering furnished rentals should invest in rental insurance that covers accidental damage, theft, and liability.
Tax implications for landlords
Tax benefits differ between furnished and unfurnished properties, so landlords should be aware of potential deductions.
- Furnished rentals – Furniture and appliance costs can be depreciated over time, reducing taxable income.
- Unfurnished rentals – Landlords can claim deductions on repairs, maintenance, and mortgage interest.
It’s important to check current tax laws or consult a property accountant to ensure you are maximising all available deductions.
Which is the better option for landlords?
The best option depends on your investment strategy, tenant market, and management preferences.
- Furnished rentals work well for landlords who want higher rent and short-term tenants, but they require higher maintenance and management costs.
- Unfurnished rentals provide lower maintenance, and long-term stability but generate less rental income.
For landlords looking to strike a balance, a semi-furnished approach can offer flexibility. Providing essential appliances while allowing tenants to furnish the space themselves can cater to a wider range of renters, from those who prefer move-in-ready convenience to those who want to personalise their home.
If you’re looking for expert advice on renting out your property, contact your local Whitegates branch today for guidance on maximising rental income and finding the right tenants.
