Instead of continuing to bank strong Coast residential rental income, some investors may be tempted to take a profit from this upward moving market, but if a tenant is in place this adds complexity to the selling process.
Tenants have the right to quiet enjoyment of a rental property. This means you need to consider several issues and rules before and during the selling process.
It’s certainly worth noting the Real Estate Institute of Queensland’s (REIQ) advice that a fixed-term tenancy agreement has priority over the sale of the property, and the lease must be honoured if the property is sold.
Right at the start, a notice of your intention to sell must be given to the tenant. The notification should include the details of the selling agent and proposed selling strategy.
Once this notification is submitted, you or your agent can organise entry to the property provided a written notice delivered no less than 24 hours in advance is given to the tenant. Entry must be arranged for a time that is suitable and agreed with the tenant. It can’t be on public holidays or Sundays, before 8am
or after 6pm.
When it comes to the selling strategy, open homes and onsite auctions are not allowed unless the tenant agrees in writing. Also not allowed is the recording and sharing of the tenant’s possessions for marketing purposes unless the tenant agrees in writing.
It’s important you think about your plans for the property before signing off on a tenancy agreement because if you decide to list the property for sale within the first two months of a periodic or fixed-term tenancy agreement, the tenant can end the tenancy agreement with just two weeks’ notice. That can certainly have an effect on the hip pocket when the rent is needed for mortgage repayments.
It’s obviously a fine line between achieving the desired outcome of a timely sale of an investment property and keeping the tenant in place during that period to keep rental income flowing in.
When a property is sold, the fixed-term lease must be honoured. The tenant will need to be told the details of the new owner including the name of the managing agent. The new owner may then wish to negotiate ending the tenancy agreement.
If there is a periodic lease in place and the buyer requires vacant possession, you or your agent must give the tenant at least four weeks’ notice from the signing of the contract of sale.
Median rent data for 12 months to December 31, 2021 (released January 2022)
Sunshine Coast LGA:
$450 per week for a 2-bedroom flat/unit.
$540 per week for a 3-bedroom house.
$410 per week for a 2-bedroom flat/unit.
$410 per week for a 3-bedroom house.
Source: Queensland Government Statistician’s Office