The current and sudden Sydney lockdowns have caused great confusion for landlords, tenants and property managers. We now have some clarity. Here’s what you need to know.

1. Repairs and maintenance in tenanted properties

Only urgent repairs and maintenance can occur. Everything else needs to wait until things reopen again. For tenants, our recommendation is to report any issues to your property manager, just as you usually would, and let them determine the urgency or otherwise.

2. Cleaning, repairs and maintenance in vacant rental properties

If you have a vacant investment property, cleaning, repairs and maintenance are permitted providing they are necessary for re-leasing the property.

3. Inspections and opens

In the Greater Sydney area, one-on-one property opens are allowed as long as they follow current COVID restrictions.

4. Rent reductions and protection from eviction

Tenants can request a substantial rent reduction if they fall into the category of an “impacted tenant” and provide evidence of this to the landlord or property manager.

An “impacted tenant” is a member of a household who has suffered a reduced weekly income (due to the impact of COVID-19) of at least 25% because one or more of the rent-paying members of the household have:

• Lost employment or income
• Experienced reduced work hours or income
• Stopped working or substantially reduced their work hours because:
  • They are ill with COVID-19
  • Another member of the household has COVID-19
  • They need to take care of a family member who is ill with COVID-19

Tenants are advised to have honest discussions about their financial situation with landlords (or their property manager) so an agreement can be reached on the rent to be paid for the duration of the lockdown.

“Impacted tenants” can pay at least 25% of their usual weekly rent to receive a 60 day moratorium on eviction. This moratorium includes failure to pay rent and other breaches of the tenancy agreement under section 87 of the Residential Tenancies Act 2010 (NSW).

5. Relief for landlords

Landlords who provide tenants with rental relief can apply for Residential Tenancy Support Payments. These payments are based on the rental reduction provided – to a maximum of $1500 per property.

Alternatively, landlords can apply for land tax concessions. These concessions are the equivalent of the rental reduction provided to each tenant, up to 100% of your 2021 land tax liability.

Owning an investment property is complicated

We can’t recall a more complicated time to be a landlord. Not only do you need to understand how the current lockdowns affect any repairs, maintenance and cleaning that can be done. There’s the added burden of having difficult conversations with tenants about their financial ability to pay rent.

If you manage your own investment property, I suggest it’s time to seek help from a professional property manager. If you currently engage a property manager, you need to evaluate how confident you are in their negotiation skills and understanding of the legislation.

For help or a second opinion, contact Brigitte from Stills Properties. With over 35 years’ property management experience, she understands the rights and obligations of both landlords and tenants. To get in touch with her call 1300 091 638 or email propertymanager@stillsproperties.com.au

What is a pre-purchase rental appraisal and why do you need one?

Investing in property has always been a popular wealth creation strategy with Sydney-siders and there’s good reasons for that. But like any investment, there are good investments and bad investments.

With high Sydney property values, it’s more important than ever to ensure your rental income will generate a decent return. After all, you probably need the rent to cover expenses such as loan repayments and rates as well as providing you with additional income.

Therefore, relying on a rental estimate from the selling agent, may not be as accurate as you need because they focus on property values – not rental returns.

That’s why we believe it’s important to invest in an independent, pre-purchase appraisal from a knowledgeable property manager. By independent, we mean a property manager who isn’t trying to win the management because there may be a temptation to over-estimate the rental return.

Instead, we suggest paying for a pre-purchase rental appraisal report that provides accurate, factual data.

What information should be included in a pre-purchase investment property appraisal?

1. Number of rental properties in the area

Demand drives price so if there are lots of properties for rent in the area, rental returns will be lower. For example, in Sydney at the moment, it’s not uncommon for a suburb to have 80+ properties available for lease.

2. Recent rentals gained

Rents in Sydney have changed significantly over the last 2 years. At the end of 2019, rental incomes were much higher than they were in mid-2020. They are now on the rise again. So to know what rental return you can realistically expect, you need to look at what the most recently leased properties in the area are achieving.

3. Local rental property comparisons

Comparing local rental properties with the property you are thinking of buying will give you a more accurate idea of the rental income you can expect to receive. Then you can compare it with your borrowing costs and other expenses to determine if the investment returns are there.

4. Tenant appeal

Minimising vacancy time is crucial to maximising rental income. That’s why it’s important to understand what tenants in the area are looking for and match that with the type of tenant your potential investment property will attract. Number 1 on every tenant’s wish list is air conditioning followed closely by a dishwasher. Then it’s things like modern appliances, cleanliness, space, number of bedrooms and bathrooms etc.

5. Understanding what upgrades may be required now or soon

Purchasing an investment property means you need to cover any immediate or medium-term upgrades and maintenance issues. Knowing what is required before you purchase means you can negotiate harder on the purchase price and make an informed decision on whether the property is the right one for you.

Where to begin?

With over 35 years’ property management experience, you can rely on Brigitte Stills to provide you with a comprehensive and accurate pre-purchase investment property rental appraisal. Her report will cover all of the above factors and provide you with a totally independent assessment of whether purchasing a particular property will be a wise financial decision.

At only $150 + GST, a pre-purchase investment property rental appraisal could be the best investment you make. To find out more or to arrange your appraisal, contact Brigitte on 1300 091 638 or propertymanager@stillsproperties.com.au

The Sydney rental market is still proving difficult for landlords with many deciding to sell their investment property. But before you make this important decision, you need to consider 5 very important factors.

1. Capital gains tax

Once you have a property appraisal from an agent, you need to talk to your accountant because investment properties can attract capital gains tax. As a result, you may find the after tax proceeds of selling your rental property could be significantly lower than you were hoping for.

2. Vacant or tenanted?

Landlords often ask us if they should sell their investment property with or without a tenant. The answer really depends on your property and it’s location. Some properties attract investors so are more desirable when leased by good tenants.

If your property is more likely to appeal to owner-occupiers, they will often insist on a “vacant possession” clause in the contract. This means your current tenants will need to move prior to settlement.

Remember:  While your investment property is empty, you won’t receive any rental income and this needs to be factored into your budgeting.

3. Tenants’ rights

You may own the property but it’s your tenants’ home. Therefore, they have significant legal rights when it comes to selling your property.

Tenants must be given appropriate notice before your property goes on the market. During opens they are entitled to remain in the property. They can also refuse to have their belongings used in promotional photography. In addition, your tenants are legally entitled to terminate the lease once they are advised you are selling the property.

A successful sale will depend on your tenants’ co-operation should they chose to stay. That’s why it’s important your property manager has a strong relationship with them.

4. Incentivise the inconvenience

If you have ever sold your home, you know how inconvenient it is. The opens disrupt your weekends and there’s always pressure to keep the property looking neat and tidy. If you decide to sell your investment while the tenants are living there, it’s a good idea to offer them a reduction in their weekly rent in return for their co-operation.

5. Could you get back in?

The Sydney property market has it’s highs and lows. At the moment, the rental market is low but according to CoreLogic, the Sydney housing market has increased by 3.7% in March alone. While the first quarter of 2021 has seen Sydney residential prices increase by 6.7%. This means the median house price in Sydney is now $1,112,670 while the median unit price is $755,360.

So ask yourself, if you sell your investment property now, will you realistically be able to invest again? No-one has a crystal ball but it’s worth considering whether you should hang in there until rents return to a more “normal” level or sell now.

Careful thought is needed

If you decide to sell your investment property, you need to ensure your tenants are treated with respect, care and compassion. That’s why the team at Stills Properties believe in open communication and understanding when first advising a tenant that the property is being sold.

It’s also important to have a sales agent who understands the sensitivities of tenants and will work closely with your property manager throughout the selling process. With over 35 years’ experience in selling and managing properties, our founder Brigitte Stills can help you select a great sales agent while guiding you and your tenants through the sales process.

To discuss your options around selling or keeping your investment property, contact Brigitte on 1300 091 638 or email propertymanager@stillsproperties.com.au