With recent research revealing that landlords providing furnished properties could earn over 20% more in rent, a PropTech platform is urging landlords to cut administration costs to free up the extra cash needed to furnish their rental homes and generate more in rental income.
RentalStep says the study by property website OnTheMarket, which examined the rents of a typical two bedroom flat furnished and unfurnished in the same area in nine major UK cities, highlights the need for landlords to make savings where they can to increase the number of homes they let as furnished.
The research found that furnished flats can command up to 21% (or £128) more than unfurnished ones.
Elsewhere, a joint report into the lettings market by Reapit and Dataloft revealed that tenants are willing to pay a premium of 10% outside London and 16% inside the capital for a two-bedroom furnished flat. In the former case, this equates to an additional month of rent paid each year, while in the latter it is equivalent to almost two months’ rent.
However, offering a furnished property can be expensive. The above OnTheMarket research, for example, showed that the cost of furnishing a two-bedroom flat could be around £1,800, with the inclusion of a sofa, coffee table, bookcase, television, table and chairs, two double bed frames, two mattresses, a desk and an office chair.
“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,” Mike Georgeson, founder and chief executive of RentalStep, comments.
“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.”
To help landlords connect with the best possible tenants without huge costs to go with it, RentalStep offers free tenant referencing, free tenancy agreements, free credit checking, free landlord references and free employer references, ensuring that landlords can effectively pre-qualify tenants before they view a property.
“We believe that referencing and tenancy agreements should be free,” Georgeson adds. “Our partnership with credit check website Experian enables us to absorb the cost of credit checks, while our landlord and employer references are automated and therefore don’t require a charge either. What’s more, we use digitised Assured Shorthold Tenancy Agreements – meaning, once more, no costs involved.”
“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 is especially the case outside of London, where most rental properties are let unfurnished. The Reapit/Dataloft report showed that 75% of properties outside of London are unfurnished while only 25% include furniture.
It’s a different story in London, where 60% of lettings are furnished. Even then, the majority of furnished properties are flats, with only 24% of the houses rented so far in London in 2018 coming with furniture. This falls to just 11% outside of London.
“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,” Georgeson says.
“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.”
RentalStep, which was established in 2017 and was one of the six winners of the government’s Rent Recognition Challenge, also offers a unique TenantPassport – a thorough, verified account of a tenant’s rental history, references and employment details to allow landlords to assess their reliability.