As a landlord in Victoria, you may be feeling the pressure of recent interest rate increases, prompting you to consider selling your investment property and exploring other opportunities. If you find yourself in this position, it's important to be aware of the challenges and potential pitfalls associated with selling a property while it is still occupied by a tenant.
Current laws in Victoria stipulate that the tenant must be given proper notice of the intention to sell the property. This notice can be provided at any time during the lease, whether it is a fixed-term or month-to-month agreement. It's crucial to remember that the tenant has the right to give only two weeks' notice to vacate the property without any penalties. Additionally, you are required to give the tenant at least 24 hours' notice of entry prior to any marketing activities, such as taking photos or creating floor plans. Please note that such activities should be conducted between 8 am and 6 pm, and the tenant may object to having their belongings photographed, which could present an issue during the sales process.
During the sales campaign, the tenant is entitled to compensation for half a day's rent or $30, whichever is greater, for each open house inspection. However, sales agents are limited to conducting only two open house inspections per week.
One of the challenges in selling a tenanted property is the condition in which the tenant maintains it during the sales process. According to the law, tenants are not required to make any special effort or incur expenses to enhance the property's appeal to prospective buyers. They are only obligated to maintain the premises in a “reasonably” clean condition. The presentation of the property may vary depending on how organised and tidy the tenant is.
Although there are financial challenges of not having a tenant in place during a sales campaign, it remains more cost-effective than selling a property in poor condition, considering the adverse effect it would have on the sale price.
To avoid such a scenario, I recommend that your sales agent visits the property and discusses the sales process with the tenant. This is to see if the property will be presentable for a sales campaign and if the tenant is willing to cooperate. Surprisingly, many tenants are more than willing to assist in making the process as seamless as possible. Offering a small financial incentive to the tenant can go a long way in fostering cooperation.
Remember, a well-presented and cooperative property can yield better results in terms of sale price and overall buyer interest, making the temporary financial sacrifice worthwhile. If you have any further questions or concerns, please do not hesitate to reach out to me or your real estate agent for guidance and support throughout the selling process.
Written by Elli Blanco