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

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