The advantages of furnished letting: do you know them all?

Dive into all the advantages of furnished letting and everything that makes it distinctive.

Investor owners, and you may well be one, are quick to wonder how best to make the most of the properties they have bought or are about to buy. Letting residents move in is of course the logical next step, but some of you may legitimately ask on what terms and under what conditions it makes sense to set up your rental offer. Historically, so-called conventional letting seems to be many people’s first idea: putting an empty home on the market, or at most one with a partly fitted kitchen. There is, however, another option well worth studying if you hope for a meaningful return on investment. You will have guessed it: in this article we are going to look at the advantages of furnished letting. But not before explaining the legal framework that governs it and the few differences and subtleties that this way of offering your accommodation obeys. We will set out the benefits of choosing this way of making your properties available, for you but also for your tenants, and for both short and long stays. You will then have every key you need to make the right decisions and improve your profitability.

1. What a furnished let is

Furnished letting means making available a home equipped with all the furniture and equipment needed to live there independently. Under French law, for accommodation to qualify as such and to promise the tenant a certain level of comfort, it must include a number of essential items:

  • Bedding;
  • Window coverings that block out light (shutters, curtains);
  • Cooking equipment (hob, oven);
  • A fridge and a freezer (or at least a freezer compartment);
  • Crockery;
  • Kitchen utensils;
  • A table and seating;
  • Storage shelving;
  • Light fittings and cleaning equipment suited to the characteristics of the home.

These requirements ensure that the tenant can move in without needing to bring additional furniture. A furnished let can be chosen as a main residence, a second home or even a holiday rental, with specific rules and contracts depending on its use. If the list of required furnishings is not met, the tenancy can be reclassified as an unfurnished tenancy, which may have legal consequences for the owner. Furnished letting is therefore a practical option with many positives for tenants and for you as the owner. We will expand on that a little further down.

2. The law on furnished letting

If that is the route you have chosen, you need to know the rules governing this way of making your property available. First of all, you have to distinguish between the three types of tenancy these homes can fall under.

The furnished residential tenancy

This is the tenancy for those who want to rent your property as their main residence. In that case, and since 29 July 2023, it must contain precise information:

  • Your name and address as the owner (and those of the managing agent, where applicable).
  • The tenants’ names.
  • The start date of the tenancy and its duration (a minimum of one year, or 9 months if the tenant is a student).
  • A description of the home and its equipment (house or flat, number of rooms, private and shared facilities).
  • Works carried out since the last occupants left, and their total cost.
  • The habitable floor area (failing which, tenants are entitled to ask for an adjustment to the rent).

As for the rent itself (along with service charges and the deposit), several things must be stated in the tenancy agreement:

  • The amount (which may be free or regulated depending on the municipality) and the rules for any rent review, as well as the payment arrangements (date and frequency).
  • The amount of the last rent charged to the previous tenants.
  • Whether the service charges are actual or a flat rate (and in that case, the amount of the flat rate).
  • The amount of any deposit (two months’ rent excluding charges).
  • The theoretical amount of heating costs.

There are also several documents to attach to the agreement, among them:

  • A valid EPC (energy performance certificate).
  • A statement of risks (natural risks among others, depending on where the home is located).
  • A noise assessment (again, where the area is concerned).
  • A certificate of insurance against tenancy risks.
  • An extract from the co-ownership rules, if the home forms part of one.
  • A check-in and check-out inventory of condition.
  • An information notice.
  • And therefore an inventory with the detailed condition of the furniture and details of the television and internet equipment (fibre, digital terrestrial, etc.).

Finally, as regards ending this tenancy, it can end at any time with one month’s notice if the tenants request it. If it is at your initiative as the owner, it can only happen:

  • At the end of the tenancy term.
  • On permitted grounds (taking the property back to live in yourself, to sell, or any other « legitimate and serious ground »).
  • With a minimum of 3 months’ notice.

The mobility tenancy

Here the tenant may treat your property as their main or second residence. To qualify, they must be in one of the following situations:

  • Be a student or in vocational training.
  • Be on an apprenticeship contract or an internship.
  • Hold the status of a volunteer on a civic service placement.
  • Be on secondment or assignment in the course of their work.

This tenancy must last between one and ten months. It must contain the same information as a conventional letting agreement, with a few additional details:

  • The ground entitling the tenant to a mobility tenancy.
  • The sentence stating that the letting agreement is a mobility tenancy governed by title 1 ter of Act 89-462 of 6 July 1989 on improving landlord and tenant relations.
  • A clear statement that you, the owner, may under no circumstances ask for a security deposit for the letting of your property.

The rent is also freely set (or regulated, again depending on the municipality).

Ending the tenancy at the tenants’ request follows the same rules as for the furnished residential tenancy. You, for your part, cannot renew it.

Furnished tourist accommodation

If you want to welcome travellers to your properties more frequently and for shorter periods, there are certain steps to take before you can go in for seasonal letting (short or medium stays):

  • A compulsory declaration to the town hall. It must show the following information: address, number of rooms and beds, and the periods when the accommodation will be available (under the Hoguet Act of 2 January 1970, your property cannot be let for more than 90 days a year to the same person). Some municipalities also issue a registration number, which must appear on every listing for your accommodation.
  • A change-of-use authorisation. This applies in several areas for properties set up as second homes intended for furnished letting. Those areas include Paris and its inner suburbs, conurbations of more than 200,000 inhabitants such as Bordeaux, Lyon and Marseille, as well as towns of more than 50,000 inhabitants classed as pressured areas, where demand for housing exceeds supply. It has a set duration that can differ from one municipality to another (two years in Toulouse, four in Marseille, for example) and you must reapply each time the authorisation expires.
  • A compensation rule. For towns of more than 200,000 inhabitants (and again in the Paris inner suburbs), this means you, dear owners, creating housing of an area equal to the one you are devoting to seasonal letting. (In the Paris arrondissements most popular with tourists, it has to be doubled outright.) These municipalities take the view that your furnished tourist accommodation removes a long-term home from their area.

Rents and deposits remain at your discretion; nothing is imposed on you. We would nonetheless advise staying within the prices seen in your area so as to remain competitive. The specifics around the end of the tenancy (in other words, the end of the travellers’ stay) are to be defined in the letting agreement.

Do not hesitate to read up further on the rules of furnished letting.

3. The tax treatment of furnished letting

This is a complex subject built around several tax regimes, mainly the micro-BIC regime and the actual-expenses regime. Income from furnished letting is classed as industrial and commercial profits (BIC) and taxed under the progressive income tax scale. For non-professional furnished landlords (LMNP), where annual receipts are below €23,000 and do not exceed the household’s other earned income, the micro-BIC regime applies. That regime offers a flat-rate allowance of 50% for costs and expenses, with a minimum of €305. Above that threshold, or where the activity is carried on professionally, landlords must move to the actual-expenses regime, which allows actual costs to be deducted and the property to be depreciated.

Reporting obligations also vary with the regime. Under micro-BIC, landlords simply declare the gross amount of receipts, whereas under the actual-expenses regime a more detailed return is required, including deductible expenses and depreciation. It is worth noting that since 2023 changes have been made to the micro-BIC income ceilings, rising to €77,700 for lettings of furnished residential premises and €188,700 for guest rooms and officially rated furnished tourist accommodation. Furnished letting also offers certain tax advantages, such as exemption from tax on receipts from letting rooms in your main home, provided that the let is the tenant’s main residence and the rent is regarded as reasonable. For 2023, the annual ceiling excluding charges is set at €199 per square metre in Île-de-France and €147 per square metre elsewhere. For you, investor owners, understanding the taxation of furnished letting is essential to optimise your rental income and comply with your legal obligations. We would of course advise consulting an expert or referring to the official resources provided by the tax authorities for up-to-date information specific to each situation.

4. The advantages of furnished letting

For owners

Furnished letting offers several advantages to you if this is your situation. First of all, it generally gives you higher rental returns than unfurnished letting, thanks to the higher rents tenants are willing to pay for an equipped home. In addition, non-professional furnished landlord (LMNP) status allows you to benefit from favourable tax treatment, with the possibility of depreciating the property and the furniture, as well as deducting expenses and loan interest from rental income. Furnished letting also offers greater flexibility in managing tenancies, with shorter agreements that can adapt to the changing needs of the market and of your own life. It also meets growing demand for ready-to-live-in homes, particularly sought after by mobile professionals and students (as we saw above). Finally, furnished letting can help preserve the owner’s asset, because the property is regularly maintained and refreshed to stay attractive on the rental market. All these advantages make furnished letting an appealing option for property investors like you.

Have you already come across professional subletting as a way of taking the subject further?

For tenants

It offers several advantages for tenants. First, it allows a quick and less expensive move, since there is no need to buy furniture and appliances. It is also ideal for short or medium stays, avoiding frequent and costly removals. The flexibility of furnished tenancies is another strong point, often offering shorter agreements than unfurnished lets. That can be a great asset for our student friends, professionals on temporary assignment or people going through a life transition. Another benefit is the chance to live in sought-after neighbourhoods at a reduced cost, since furnished homes are sometimes more accessible than their unfurnished counterparts. Finally, furnished letting can offer a certain peace of mind, as it generally includes all the equipment needed for comfortable day-to-day living, which reduces concerns about maintaining and equipping the home.