There is no legal definition for what constitutes a "furnished" property. However, if you are advertising a property as furnished tenants will expect that the following items will be provided:
If you decide to let the property furnished, you will need to make sure that all the furniture provided meets legal safety standards.
The (Fire) (Safety) Regulations 1988, as amended by the Furniture and Furnishings (Fire) (Safety) (Amendment) Regulations 1993, state that furniture provided in furnished accommodation must be fire resistant. This applies to all new furniture provided after 1 March 1993 even if your tenancy started before 1993. These regulations do not apply to furniture made before 1 January 1950 or soft furnishings, such as bedclothes, carpets, curtains or pillowcases.
It can be costly to furnish a property from scratch, but some discount furniture retailers have "starter home" deals which can work out at a bargain. You can also check local charity shops for furniture. Keep receipts for everything you purchase. If a tenant damages an item and you need to take the cost from their deposit, you may need to prove how much you originally paid for the item.
The quality of furniture you provide, as well as the overall décor will have an impact on the amount of rent you can charge and the type of tenant you will attract.
You may want to consider providing items such as a vacuum cleaner or mop and bucket to allow your tenants to clean the property effectively. However, be aware that if something is included with the letting the tenant may expect you to purchase a replacement if an item, such as a vacuum cleaner, breaks during the term of the tenancy.
At the start of each new tenancy you should take a thorough inventory so you know exactly what items were in place in the property when the tenancy began. You should give a copy of this inventory to your tenants.
If you let your property as furnished, make sure you have sufficient insurance cover in place to protect the furnishings provided in case of theft or damage.
From time to time, you will need to repair or replace items that are provided in your furnished letting. When this happens you should establish whether the damage is due to wear and tear, a fault with the item or misuse by the tenant. You should consider the nature of the damage, the age of the item and the item's condition at the beginning of the tenancy when making this decision.
If the tenant is at fault, you may be able to claim the cost of the repair or replacement from the tenant's deposit. You should work out what percentage of the replacement cost is a fair charge on the tenant. For example, if an item has an expected lifespan of 10 years and the damaged item which you have to replace was 5 years old, it would be reasonable to charge the tenant 50% of the replacement cost, where the tenant is liable for the damage.
You should keep receipts for any items which you purchase or any repair work that has been carried out in case your tenant decides to challenge this in court.
If you decide to let the property unfurnished, you may have to accept a slightly lower rent than you would otherwise. You will also limit your rental market. Students, for example, are unlikely to want to rent an unfurnished property. Even in an unfurnished property, you should include floor coverings and some sort of window coverings, e.g. blinds.
You should make tenants aware in their tenancy agreement and when they move in that they could be held liable for any substantial damage incurred as a result of moving furniture in and out of the property.
Her Majesty's Revenue and Customs (HMRC) defines a furnished property, for tax reasons, as "one that is capable of normal occupation without the tenant having to provide their own beds, chairs, tables, sofas and other furnishings, cooker etc. The provision of nominal furnishings will not meet this requirement".
If you decide to let your property furnished, you can claim for a deduction on your tax return for either of the following:
Once you decide which of these deductions you will claim for you must adhere by the decision and cannot change it in subsequent tax years.
"Net rent" refers to the rent received less any charges that should normally be incurred by the tenant, but are collected by you in the rent, such as rates or service charges.
"Net cost" refers to the cost of the replacement less any amount received for the original item.
Whether your property is furnished or unfurnished, you can deduct the cost of renewing or repairing any fixtures that are an integral part of the building. This includes items that would not be removed by the owner if the property were to be sold, e.g. baths, toilets, central heating systems. In claiming this deduction you can only claim "like for like". If you replace a basic, worn out bathroom with a much more high quality version, you will only be able to deduct the cost of replacing the old one with a similar model.
If you are buying a new installation because you are converting a property to let for the first time or have bought a property for letting which requires a new bathroom, you will not be able to make a deduction for replacing fixtures.
You can find out more about the tax implications of being a landlord by contacting HMRC or talking to your accountant.