This article will help you to better understand why so many landlords are now turning to furnished rentals rather than “empty” rentals.
We will try to see here what are the advantages of furnished rentals. Is it a good solution if you want to invest in real estate in Paris?
1 – A more flexible type of rental
Contrary to the empty rental which offers only one type of lease, the furnished rental offers more flexibility by proposing various and adaptable leases to each situation of the tenants.
We distinguish in particular:
- The student lease (defined by the ALUR law),
- The furnished lease for a main residence (defined by the ALUR law),
- The lease for a secondary residence or company housing,
- The mobility lease,
- Or even the seasonal lease.
For more information on this subject, find more information in our article: the different rental leases.
Each contract has its specificities, but for the contracts which are today the standard, those defined by the ALUR law, the differences between the furnished lease and the empty lease are as follows:
|||Furnished rental||Empty rental|
|Lease duration||1 year, renewable||3 years, renewable|
|Security deposit||2 months rent||1 month rent|
|Lessor’s notice||3 months||6 months|
|Tenant’s notice||1 month||2 months|
|Taxation||Professional income||Property income|
Obviously, for furnished rentals, a list of furnishings to be provided to tenants must be respected. You will find it in our article: 4 questions to ask yourself before renting your furnished apartment.
2 – A higher rent: renting furnished to obtain a better income
After years of development, the offer has considerably increased but the demand is such that the rents have not stopped increasing.
This is the reason why our policy makers have applied the ALUR law to furnished rentals in order to regulate this type of “trendy” rental.
In compliance with the regulations in force, an owner can always expect rents to be 10 to 20% higher than for an empty rental.
3 – An advantageous tax system for owners
It is important to note that the rents received in furnished rental are taxed in the category of BIC (Bénéfices Industriels et Commerciaux, in english Industrial and Commercial Profits, as they are considered professional income), and not in the usual category of property income.
Thanks to your status as a non-professional furnished landlord, you will have the choice between two taxation systems: the micro-BIC and the real regime.
Our article on the tax advantages of renting out furnished property will enlighten you on this subject.
4 – A strong demand for furnished accommodation in Paris
There is a strong demand for this type of housing in Paris.
Indeed, the fact of being able to leave the property in only one month (against three months in empty rental) and the fact that the tenants do not have to worry about the furnishing of the apartment allows them to benefit from a property quickly and thus to leave it as well.
Various points generate an important arrival of potential customers on the market throughout the year:
due to the large number of higher education institutions in Paris and its suburbs, there is a high demand for furnished accommodation in these areas.
Whether they are provincials or people coming from other countries for their studies, the requests for furnished rentals are numerous!
Indeed, people coming for a short period of time will tend to prefer a furnished apartment where everything is already installed and ready to welcome the tenants.
Large companies are also numerous in Paris and its suburbs, which brings in a provincial and foreign clientele looking for a furnished apartment offer, which is easier for them when it comes to settling in quickly.
5 – The property remains maintained
This aspect is especially interesting if you wish to rent out your second home, or if you are an investor.
Indeed, the fact of having your apartment rented allows to keep it maintained!
You won’t have to worry about problems that can happen when you have an apartment that you don’t use or hardly use, whether it’s water leaks that turn into water damage or offenses such as theft or damage.
Despite the new regulations that aim to limit the number of vacant units, these units remain very numerous in Paris. Some owners are reluctant to rent their property because they do not have the financial need.
For others, despite the flexibility offered by furnished rentals, they lose some of their freedom by renting their property. (See our article on vacant apartments in Paris).
To summarize in a few points, renting furnished is :
- A greater flexibility in the proposed contracts;
- A higher income compared to renting empty;
- An advantageous tax system;
- A strong demand for furnished accommodation;
- Even if an owner does not need to rent his property financially, it is a way to keep it maintained and thus to preserve a patrimonial value.