The Prime Minister has copped it this week (nothing new, right?) over providing notice to leave to the tenant from one of his investment properties, to make way for an upcoming sale of that property.
Given the highly publicized rental crisis at play nationally, and the fact that this was a fairly affordable rental property that has served as someone’s home for some time, the optics aren’t great for the Prime Minister to be taking one more property out of the rental pool. While it appears he is perfectly within his rights to make the call, and selling the property as vacant will likely yield him a much better financial result, this might have been one of those occasions where he may have been better off with a lower sale price and a better reputation.
For those of us that aren’t driven in bulletproof limos and have a plush bedroom at Kirribilli House though, what should you do when it comes to selling your tenanted property - continue with a tenant in place, or go vacant?
If your tenants have a fixed term lease with much time left on it, the question becomes a moot point, as a fixed term lease is just that, and cannot be terminated (without serious grounds) without mutual agreement. If you have six months left on the lease and you want to go to market now, well you’re doing it with the tenant in place, and the buyer taking on that tenancy as part of the package.
With a lease coming to the end of its term though, or in the case of a periodic lease its much more relevant, particularly as the sale of a property is one of the few remaining rights of termination under a periodic tenancy.
The current market is being driven primarily by owner occupiers, rather than investors and even where investors are active, we still tend to see owner occupiers better positioned to win the keys. Under those circumstances, having a property vacant (or close to it) is going to offer an advantage.
As an agent, whether to launch with a tenant in place comes down to two things – can I work with the tenants and if not, is the inconvenience worth waiting two months to get past? Friendly tenants, easy communication for access and great presentation – perfect, lets leave things as is. Mess everywhere, refusal to grant access (with appropriate notice) or anything else likely to impact on the sale? Then that might be another discussion….
Tom Quaid is the REIQ Zone Chair for Cairns