Property TypesFurnished Property
Synonyms: Furnished Rental، Furnished Apartment، Furnished Accommodation
Last updated: 2026-10-05
Short Definition
A furnished property is a residential or commercial unit let together with its furniture and basic appliances so that it is ready for immediate use without the tenant having to furnish it; its rent is usually higher than that of an equivalent unfurnished unit to compensate for the value and wear of the furniture.
Overview
A furnished property is a residential or commercial unit let together with its furniture and basic appliances so that it is ready for immediate use without the tenant having to furnish it; its rent is usually higher than that of an equivalent unfurnished unit to compensate for the value and wear of the furniture.
In Saudi Arabia, the legal framework for a furnished property is determined by how it is used, not by the presence of furniture. If it is let as a permanent home for a year or several months, it is documented as a residential lease on Ejar and its rent remains VAT-exempt, because the exemption depends on the property being a permanent dwelling. If it is offered to tourists for paid overnight stays, it becomes a ‘private hospitality unit’ that needs a Ministry of Tourism licence under the Private Hospitality Unit Regulation (Umm Al-Qura, 11 September 2026) and falls outside the definition of residential real estate in the VAT regulations. The Civil Transactions Law requires the landlord to deliver the leased property and its accessories fit for use, and requires the tenant to return it in the condition received, except for ordinary wear.
In practice, the key document in a furnished lease is the inventory of furniture and appliances with photos of their condition at handover, which settles disputes about damage and fair wear at move-out. Furnished units appeal to expatriates and short- to medium-term tenants, but the owner bears the cost of buying, replacing and maintaining the furniture, and the rent should reflect this. In Riyadh, the freeze on annual increases applies to the total rent, so furnishing alone does not justify exceeding it.
⚖️ Legal Basis
Furnished leases are governed by the Civil Transactions Law issued by Royal Decree No. (M/191) dated 29/11/1444H: Article 416 requires the landlord to deliver the property and its accessories in a condition fit for the intended use, Article 430 requires the tenant to take the care of an ordinary person and compensate damage caused by fault or negligence, and Article 435 requires the tenant to return it in the condition received, except for ordinary wear. Article 30 of the VAT Implementing Regulations exempts residential leases and excludes hotels, serviced accommodation and any building designed for temporary stays. The Private Hospitality Unit Regulation published in the Umm Al-Qura Gazette on 11 September 2026 requires a Ministry of Tourism licence to operate the unit and caps a tourist’s stay at 29 consecutive days.
💡 Practical Example
The owner of a three-bedroom flat in Al-Rawdah, Jeddah, used to let it unfurnished for SAR 48,000 a year. He furnishes it for SAR 40,000 and offers it furnished at SAR 62,000 a year, so the difference (SAR 14,000 a year) recovers the furniture cost in roughly three years, close to the furniture's useful life. The lease is documented on Ejar as residential for SAR 125 with no VAT, and a photographed inventory of 58 items signed by both parties is attached. At move-out, the inventory shows a glass table worth SAR 1,200 broken by the tenant, which is deducted from the deposit, while the tenant is not charged for faded curtains because that is ordinary wear.
⚠️ Common Mistakes
- ✗Relying on the phrase ‘flat is furnished’ without a photographed inventory of furniture and appliances, which makes proving damage at move-out difficult.
- ✗Charging the tenant for ordinary wear of the furniture, although the law excludes wear resulting from ordinary use.
- ✗Letting a furnished flat to tourists by the day without a Ministry of Tourism licence, thinking the owner's lease is enough.
- ✗Assuming that furnishing alone makes the rent subject to VAT, when what matters is whether the unit is a permanent home or temporary hospitality.
- ✗Believing in Riyadh that adding furniture permits exceeding the freeze, when the freeze applies to total rent and a previously let vacant unit may not be re-let above its last rent.
🌍 International Differences
In the UAE, long-term furnished residential leases are distinguished from holiday homes, which need a permit from the tourism authority of each emirate. In Turkey, daily lets to tourists are regulated by a dedicated law that requires a permit. In the UK, an inventory is standard practice for furnished lets. The common thread is that what counts is how the unit is used: permanent home or temporary hospitality.
FAQs
Is the rent of a furnished flat subject to VAT?▾
If the furnished flat is let as a permanent home, it is residential real estate and exempt. If it is used for temporary stays by visitors, like serviced apartments and hospitality facilities, it falls outside the exemption and is taxed at 15% when the operator is VAT-registered.
Do I need a licence to let my furnished flat by the day?▾
Yes. Letting a unit to tourists for paid overnight stays is a ‘private hospitality unit’ activity that requires a Ministry of Tourism licence under the Private Hospitality Unit Regulation (Umm Al-Qura, 11 September 2026). Since 1 January 2025, booking platforms have been required not to list unlicensed facilities.
Who pays to repair furniture damaged during the lease?▾
The tenant bears damage caused by their fault or negligence but not wear from ordinary use. Repairs needed to keep the property fit for use fall on the landlord unless otherwise agreed.
Why is an inventory important in a furnished lease?▾
It records the unit's contents and their condition at handover, settling disputes at move-out between damage the tenant must pay for and ordinary wear. It should ideally be photographed, signed by both parties and attached to the contract.
How much more does a furnished property usually rent for?▾
There is no regulated percentage; the premium is set by the market, the quality of the furniture and the time needed to recover its cost. A common approach is to price the annual difference so that it recovers the furniture cost over its useful life plus a maintenance margin.
