Tuesday, 10 September 2013

Landlord Furniture - Quality Pays Off

Spurred on by our clients who continue to benefit from increased yields by furnishing professionally, we are starting to collect data to prove that what we have been saying all along works, "furnish professionally to attract your target market."

London is predominantly a furnished market (90%) and landlords are now starting to realise this. Having said that, they still have a tendency to buy the cheapest furniture possible thinking that they are furnishing student digs (and even their expectations are rising). This is simply not the case. The average tenant paying £350 per week in central London is on an annual salary upwards of £50,000 and they have high expectations.

We appreciate there’s a natural anxiety particularly among the smaller private landlords to make the investment in furniture. Without seeing the benefits, they don’t want to use anything that’s too good or too expensive in case it gets damaged. But landlords need to consider that quality landlord furniture (and the higher rents that go with it) results in a higher calibre of tenant who is more likely to respect your property.

We hope to change this mindset by showing people the hard evidence. We recently collected data for an investor client with a portfolio of five one-bedroom properties – all within the same block (the Skylon Building in London E14). Spending £20,705 furnishing the properties, we were able to increase his annual rental income from £79,040 to £86,840 and reduce the average time taken to let each property from 28 days to only 8.2 days.

With the investor gaining £7,800 by being able to charge higher rents and a further £4,724 through reduced voids, the difference in rental income compared to unfurnished amounted to £12,524 per annum – a figure that will pay back their investment after only 1.65 years. The data showed – by selecting the right furniture package – we were able to increase our client’s yield by 9.9 per cent. And for those of you that still have doubts, this is one of many case studies that we have put together and the results have been similar throughout. If you want to see for yourself, we’ll happily email them over to you.

So – furniture isn’t just nice to have; it actually makes a real difference to your rental income. Based on this evidence, there’s no reason why furniture shouldn’t be considered as important as a new kitchen or bathroom in terms of its ability to increase the return on investment for landlords. And with our help it’s far less hassle too. Like any home improvement, the trick is not spending too little or too much relative to the value of the property, and creating the right look and feel for the prospective occupier (not your own personal tastes).