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Selling a leased apartment and what to do

Selling a leased apartment and what to do

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As we approach the Christmas / New Year break, apartment investment owners should plan ahead if they wish to sell their apartment with vacant possession.

While some period of vacancy through a sale process is unavoidable, if you don’t plan it right you may incur a lot more lost rent due to vacancy than you banked on.

Before the recent changes to the Residential Tenancies Act, an owner could let the renter know they were selling the property and the tenant had 60 days to find somewhere else to live and move out. Now the rules have changed and even if there is a lease in place a renter can move out in 2 weeks after being asked to vacate.

Let’s say you would like to start marketing your apartment in January 2022 and your agent has advised you to ask the renter (with a lease ending on 31/12/21) to move out so you can stage it for sale with hired furniture and effects.

Knowing you need to provide 60 days’ notice, you advise the tenant on the 1st Nov 2021 to please move out at the end of the lease on 31st December 2021.

Under the new rules the renter (having received the notice to vacate) can now issue a return notice that they will be moving out in 14 days’ time even though their lease doesn’t end until 31st Dec 21. Therefore you will be without a tenant and rent from mid-November to mid-January which will cost you in lost rent of about the same amount as your marketing cost. It also means the total rental loss period including the marketing and settlement time will be 5 or 6 months.

There are also new rules regarding access and compensation if you sell with your renter in place so planning the best time to sell and working closely with your agent is important.

Even without the complication of a holiday break get everything planned early for a smooth sale process.

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Written by a 4th generation real estate agent Apartments Made Easy gives you the tools and tells you all you need to know about how to buy, sell, own, lease, and manage your apartment successfully.

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