Selling any property can be a complex and time-consuming process, but it can be even more difficult when there are tenants living in it. Investment properties deliver large returns in the long term and a regular income, but when the time comes to sell, they can prove more difficult to sell than a house you’re living in.
There are a few differences between selling private and rental properties, so it’s a good idea to be aware of them before you start the process.
Selling your investment property? First: assess the situation
If a fixed-term rental agreement is in place, you will usually need to wait until it expires before you can sell your property as vacant. You may be able to an agreement for an early cessation to the contract, however, it is always a good idea to get it in writing if this is the case.
If your tenants are not on a fixed-term rental, then notice must be provided to give the tenant ample opportunity to find alternative accommodation. The statutory requirements for such requests are as follows:
- South Australia – A Notice of Termination by Landlord, giving 60 days’ notice in writing
- Western Australia – A Notice of Termination, giving 30 days’ notice in writing
- New South Wales – A Notice to Terminate Tenancy Agreement, giving 30 days’ notice in writing, or 90 days for periodic agreements
- Tasmania – A Notice to Leave, giving 28 days’ notice in writing
- Queensland – A Notice to Leave, giving 4 weeks’ notice in writing
- Victoria – A Notice to Vacate to Tenants of Rented Premises, giving 60 days’ notice in writing
- Northern Territory – A Notice by Landlord to Terminate, giving 42 days’ notice in writing
Some buyers will insist that your property is vacant when contracts are exchanged, and they will often insist on this being guaranteed within the contract of sale. In other cases, if your buyer is also an investor, they may prefer the property to be sold with a tenant in place.
In either case it pays to be fully informed of the tenancy situation before making any decisions about putting your investment property on the market. Once you understand your contractual obligations, you should discuss the correct approach with your real estate agent.
Will the house sell better tenanted (to appeal to investors) or vacant but well furnished (to appeal to potential home owners)? The answer to this depends on your local market, and is best to discuss with a quality real estate agent.
Read: Ask a real estate agent: how do I know I'm buying the right investment apartment?
Arranging viewings in properties with sitting tenants
It is important to remember that, despite it being your property, your house or apartment is someone’s home. The best way to proceed is by working together and communicating regularly. Your tenant should be comfortable with the agreed viewing times, as it is best to agree on weekly windows of opportunity in advance so you can plan viewings without the need to constantly check that they are suitable.
"Any last minute viewings should be arranged with your tenant directly, and you should give them time to stow away any personal belongings before prospective buyers arrive."
Any last minute viewings should be arranged with your tenant directly, and you should give them time to stow away any personal belongings before prospective buyers arrive. This will demonstrate respect for your tenant’s privacy, as well as allowing time to tidy and make the house look presentable. The more notice that can be given, the better.
Keeping your tenants onside is the best way to avoid issues and make sure the property looks its best for potential buyers. For this reason it might be a good idea to offer some kind of incentive to your tenant to assist you with the logistics of selling the property. One week of free rent might be a reasonable price to pay to ensure the property is well presented and tenants are promoting rather than demoting your property to any buyers who they come into contact with.
Statutory requirements pertaining to viewings in rented properties are different according to the state in which the property is located.
- Victoria – The tenant must be given 24 hours’ notice with a Notice to Tenant of Rented Premises Form
- Western Australia – Tenants should be given ‘reasonable notice’ of viewings
- Northern Territory – Tenants should be given at least 24 hours’ notice of viewings with a Notice of Requirement to Enter Premise form
- South Australia – Landlords are permitted one open inspection every two weeks, but a minimum of four days’ notice must be provided. A further two standard inspections are permitted every week, with at least 24 hours’ notice
- Tasmania – If no agreement has been reached with the tenant, viewings can take place only in the presence of the owner, and only between the hours of 8am and 6pm. The tenant must also be given at least 48 hours’ notice of a viewing, and they should be limited to one per day and five per week
"In all states, the tenant has the right to remain in the property during an inspection or open house."
In all states, the tenant has the right to remain in the property during an inspection or open house. These requirements for access also apply to real estate agents who need to appraise a property for valuation and listing purposes. Agents are allowed to take photographs, but tenants can refuse to have their belongings photographed if they so wish.
The best way to avoid conflict and ensure your property is free for regular viewings is to strike up a rapport with your tenant. Remember, there is nothing stopping your tenant agreeing to more access than the law allows.
Of course, not living in your property also presents a number of logistical issues. You won’t be on site to show people around, and you may not even live in the same town or city. In these situations it is vital to find a real estate agent who you can trust. And if possible, you need to find an agent with a proven track record in securing successful sales of rental properties – giving you the peace of mind in knowing your property sale is being well looked after in your absence.