Exploring the Benefits of Furnished Rentals

Choosing between furnished and unfurnished rentals presents unique advantages for both landlords and tenants. It's crucial, therefore, to delve into the specifics of taxation and other considerations tied to these options.

Critical aspects to evaluate when determining whether to offer your property furnished or unfurnished.

Benefiting from Favorable Taxation

While rent controls may apply in certain regions, such as Paris, the taxation benefits of furnished rentals can significantly enhance returns compared to unfurnished ones.

The key benefit of offering a furnished rental is gaining the status of a non-professional furnished renter, or LMNP, which is pivotal for those not engaging in this as their primary occupation. To qualify, rental earnings must not surpass 50% of your household's total income, with the annual gross revenue not exceeding €23,000.

Achieving LMNP status upon investing in furnished property involves choices in declaring income via the Cerfa 11921*05 form.

The micro BIC scheme offers a standard tax reduction of approximately 50% on rental earnings, which can rise to 71% for rentals in guest houses or classified tourism.

Alternatively, the real profit taxation system applies taxes based on the actual profits made.

This represents a substantial advantage for property owners, underscoring the importance of selecting the most suitable taxation method, especially when significant deductible expenses like co-ownership charges, renovations, property taxes, or loan costs are involved.

Higher Rental Income with Furnished Properties

Furnished rentals offer a notable advantage in terms of rental income, potentially yielding up to 30% more than their unfurnished counterparts. This increase is influenced by the property's location and the quality of furnishings provided, making it a lucrative option for property owners.

In high-demand cities like Paris, the difference is evident. A study from March 2021 highlighted that while an unfurnished property might rent for an average of €1,618, a furnished one could go for €1,803.

Opting for furnished rentals not only presents a significant financial benefit but also underscores the importance of safeguarding your investment with appropriate rent insurance.

Lease Flexibility Benefits for Both Tenant and Owner

Furnished rentals stand out for their lease flexibility, with lease terms considerably shorter than those for unfurnished rentals — typically one year versus three years. For student accommodations, this can be reduced even further to nine months.

The mobility lease, ranging from 1 to 10 months, adds another layer of flexibility for landlords, allowing for easier rent adjustments.

This setup also benefits tenants, providing them with the freedom to commit to shorter stay durations without the binding three-year term of unfurnished leases, ensuring all terms are clearly laid out from the start.

Furnished rentals not only offer the advantage of potentially higher rents but also provide a unique opportunity for owners to make upgrades between tenancies. These improvements can justify an increase in rental rates, enhancing the property’s appeal and profitability.

Furthermore, furnished rentals allow landlords to request a two-month rent security deposit, compared to the standard one month for unfurnished units, offering additional financial security. The notice period for tenants is also reduced to one month, significantly shorter than the three months required for unfurnished rentals, emphasizing the convenience and flexibility furnished rentals bring to both parties.

Evolving Demand and Regulatory Considerations for Furnished Rentals

Furnished rentals primarily cater to the vibrant, transient populations of major cities, attracting young professionals and students with their flexibility and readiness for immediate occupancy. Urban centers like Paris, Bordeaux, and Lyon exemplify this trend, witnessing a steady demand for such accommodations.

However, the introduction of the Alur laws in 2014 tightened regulations around rental conditions, emphasizing the need for properties to meet the criteria of decency as outlined in the decree of September 1, 2015. Consequently, landlords must ensure furnished properties are fully equipped for living, including necessities like blackout shutters in bedrooms, adequate bedding, cooking facilities, and essential furniture, thereby ensuring the comfort and well-being of tenants.

Leverage UpperKey's Comprehensive Management for Your Furnished Rental

UpperKey stands out as a premier provider in the furnished rental and vacation rental market. Opting to lease your property, whether on a traditional basis or through platforms like Airbnb, UpperKey offers end-to-end support from your initial investment to the leasing phase.

Handling every detail—technical, administrative, fiscal, and legal—UpperKey ensures you can rent out your property with complete peace of mind. Reach out to UpperKey for a tailored quote and discover the ease of turnkey property management.

Why Tenants Favor Furnished Rentals

Tenants find furnished rentals appealing for several reasons, including the lease's inherent flexibility. This option is ideal for young professionals, temporary workers, or students seeking adaptable living arrangements.

A lease agreement sets a clear rent amount, offering tenants the freedom to either extend their stay or relocate after the lease expires with ease.

Financially, furnished rentals are advantageous for tenants as they eliminate the need to purchase living essentials. Moving into a fully equipped home allows tenants to settle in immediately with just their personal items, making it a hassle-free and cost-effective choice.