Should I rent out my residence furnished or unfurnished? Why?
In Perth, most properties are rented out unfurnished. The question begs to be answered – why is this so? Is it better to rent a home that is furnished or unfurnished in Perth?
Let’s first explore the general spectrum of furnished to unfurnished properties. Most properties are rented out either:
- Fully furnished: furniture including soft furnishing such as bed-spreads, curtains, linens, towels and white good appliances as well as cooking utensils are provided
- Partially furnished: some furniture and white goods are provided
- White goods only: only selected appliances are provided e.g. dishwasher, washing machine, oven.
- Unfurnished: neither appliances nor furniture is provided
Evidently, a clear difference between both types of rental is that one comes with furniture and furnishings (e.g. cushion, bedspreads, crockery, cutlery) and the other does not.
In the Perth rental markets, most investors provide major appliances even if the property is unfurnished. It is common to find air-conditioners, dishwasher, built-in-ovens, washing machine and even dryer, as well as lighting, fans, curtains or blinds.
In considering whether or not you should rent out your apartment furnished or unfurnished, you may want to ask yourself the following questions to provide more clarity:
- The type of tenants you wish to attract?
- The property size and location?
- Depreciation advantages of a furnished property?
- Your time availability and financial situation?
- The frequency required for updating the furnishings?
- The risk involved in providing appliances and furnishings?
- Insurance coverage?
Why are unfurnished properties popular in the Perth rental market?
- They are fewer risks to the property
Potential damage to rented items often forms the largest risk that you will undertake. The more items that you put out for rental and use, the more likely it is that something would get damaged.
Although moving furniture may cause damage to properties, the costs involved in renting out a furnished property are far greater. If you don’t furnish your house, then you don’t have to worry about maintaining the furniture.
- You can respond to the requirements of WA’s largest segment of tenant
The tenant market in WA prefers unfurnished rentals. And this is the biggest reason why you should provide them with what they want, so that you can attract the largest pool of tenants possible and reduce the risk of vacancy.
Since most renters are looking for a “home” providing unfurnished rentals would allow them to customise the home to their own liking and create the space in a way they desire.
Furthermore, tenants prefer unfurnished rentals because they do not need to pay a premium for items that they do not use.
- Easier to manage
It is much simpler to manage an unfurnished property. Furniture doesn’t have to be purchased and maintained and it is very time-consuming to provide a Property Condition Report (PCR). There will be fewer risks to bond disputes as well.
In most instances, you will find that the longer the length of the rental period, the more likely a tenant would prefer to have their own furniture and selection of electrical appliances (white goods) to suit their individual needs.
- Lower vacancy rates
Since tenants who prefer unfurnished homes usually stay for the longer term, there is a lower vacancy rate in general. Tenants also prefer unfurnished properties as the lease terms are usually longer and they can be spared from the hassle of moving regularly.
- Lower financial costs
From replacement of furniture costs, insurance, costs of advertising and reletting as well as drawing up a new contract, and additional maintenance costs involved, financial viability is one reason that most owners and tenants prefer unfurnished rentals.
On the other side, here are some advantages to Property Owners and Tenants for furnished properties catered to a niche tenant segment.
Advantages to the Property Owner include a premium charge for the furnishing, higher depreciation deductions claimable during tax time and if the rental is furnished well, you may attract a higher profile tenant.
Tenants can benefit from furnished properties as it may save them money (they would not need to purchase the items using in the short term). It could also be very convenient as most household necessities at their fingertips. In addition, if the place is tastefully designed, they may save time for hunting out and refurbishing the place themselves.
In a nutshell, unfurnished properties remain the preferred choice for around 75% of renters in Western Australia today as it provides many advantages for both owners and tenants, with an offering suited for a larger pool of tenants in the rental market.
If you are a property Owner deciding whether or not to provide furnishing for your property, we welcome you to speak to our property manager before making your decision so we can help you identify some factors which the rental market appreciates or some unnecessary risks you could avoid.
