Landlords Guide to Selling a Tenanted Property
Selling a tenanted investment property can be a strategic financial decision for landlords. Reliable income throughout the sales process will positively impact your financial stability, while other investors may also favour properties with dependable tenants.
On the other hand, the sales process is often made more complex by having occupants in your property. Despite legal ownership of the investment, the property is your tenant’s home, and they may be less than happy about the potential sale. Unhappy tenants can make the process especially complicated, potentially impacting the sale procedure and as a result potential returns on investment. Conversely, your tenants may be facing a particularly stressful circumstance, with the possibility of having to find a new home, which can be both time-consuming and financially exhausting, not to mention their lack of stability in the current situation.
While selling a tenanted investment property can be complicated, we’ve created this selling guide to help smoothen the process and provide the most positive outcome for everyone involved.
Firstly, it’s a good idea to familiarise yourself with your tenants’ rights. Some of the most pertinent of which are listed below:
- Neither current nor new landlord can evict the tenant if a fixed term lease is in place, unless the lease’s terms are violated by the tenant, or both parties reach an agreement by mutual consent.
- Landlords must provide tenants at 30 days’ notice if they wish to terminate the lease at the end of the agreement, and least 14 days’ notice to vacate at the end of a fixed term lease.
- Landlords must give tenants a minimum of two weeks’ notice before the first inspection, and at least 48 hours’ notice for subsequent inspections, of which cannot amount to more than two per week.
- Tenant must give consent to signage and on sight auctions and can attend all auctions and inspections at their discretion.
For more information on tenants’ rights when ending a tenancy in NSW see the Fair Trading website.
Tips for Good Relations
One of the key components for smooth sale of a tenanted property is maintaining good relations with the tenants. We offer several tips for supporting good relationships between landlords and tenants.
- Be Open in Communications – If possible, meet with your tenants and sales agent together in person to arrive at a mutual plan for the sales process. This will leave your tenant feeling included, whilst giving them an opportunity to voice any potential concerns from their end.
- Offer the Property – consider offering the property to your tenants before going to market, as, depending on their financial position, tenants often love their home enough to purchase it. Similarly, consider offering the property to the neighbours, as often they may take up the opportunity for a longer term financial or lifestyle investment.
- Offer incentives – to mitigate any animosity that may arise during the sales process, it may be appropriate to offer various incentives to your tenants.While it’s important that the house appears as neat and organised as possible for prospective buyers, the process of cleaning and grooming indoor and outdoor areas for every inspection can be a burden to tenants, with costs associated with residential moves reaching up to $3000. It would help to moderate this by hiring cleaners or maintenance personnel before marketing the property and allowing people in. The expenses for these services are also tax deductible, incentivising you to contribute to these costs.Other incentives to be considered might include discounted rent during the sales process, or even a free week of rent after the sale of the property to offset the costs of relocation. It may also be beneficial to give tenants a small payment for every open home they prepare for, or, if required, ensure a good letter of recommendation for their next rental.
For further advice please do not hesitate to contact our team. We are always available.
We believe that dream results can only be achieved when you stop selling a house and start selling a home