Managing tenants for open inspections

Managing tenants for open inspections

You've been the proud owner of an investment property for some years, and the time has come to cash in on what will hopefully be a tidy capital gain. There's just one catch – you want the property to look its absolute best for the open for inspections. For that you need the co-operation of those tenants who have kindly helped you pay the property off over the years.

If you are not careful about how you go about it, your tenants may resort to a recent VCAT decision, which ruled that tenants could not be forced to accept open for inspections against their will. The case does not quite set a legal precedent to prohibit landlords from showing off their property altogether. Landlords have the right under the law to allow a prospective buyer to view a property. But as Tenants Union policy officer James Bennett points out, a tenant who wanted to exercise their veto rights could insist on the letter of the law that this means just one buyer, not a whole crowd.

Such cases are likely to be rare, but it does mean landlords and their agents need to be mindful of how they approach the issue of open for inspections with their tenants. It is understandable that tenants might view the prospect of having strangers going through their home with some trepidation. After all, unless they can be guaranteed that the new buyer will let them stay on, what's in it for them?

This is where a good relationship with your tenant will pay off, says Paul Nugent, of Wakelin Property Advisory, who advises vendors selling their investment properties. A disgruntled tenant can subtly undermine your attempts to get the best price for your property.

"The first thing you or your agent need to do is show respect to your tenant, and acknowledge that you understand the process is inconvenient and that you want to make it as easy for them as possible," Mr Nugent says.

Put your money where your mouth is from the outset by offering the tenant a discount on their rent as a compensation, he says. A reduction of at least 25 per cent is a fair recognition of the inconvenience tenants will experience during the sales campaign, and could be a helpful boost to their own home-buying savings if that is on the cards.

Given the hassle for the tenant of having to clean up before every open for inspection, arranging for a cleaner to come around just before each inspection is a win for everyone: the tenant enjoys a clean house for four weeks or so, while you feel confident there will be no dishes left in the sink or dirty bathrooms to deter prospective buyers. Getting fresh flowers in each week is another nice touch that will benefit everyone.

Mr Bennett says that vendors who really want to make their tenants content about leaving the property could subsidise a meal at a local cafe during viewings. "That will at least make the experience of theirhaving to leave the house each time a more pleasant one," he says. 

For tenants with concerns about privacy and security issues, more delicate negotiations may be required. Mr Nugent says it's worth pointing out that having people come through in two group viewings a week wouldbe less inconvenient than several individual inspections. "You may suggest they remove their valuables and personal items for the duration of the inspection – not just to deter light-fingered visitors, but also young children," he says.

If tenants are really very resistant to the idea of inspections – and they may well have good reason to be concerned about privacy or security, Mr Bennett points out – it maybe better waiting until their lease has expired so you can offer the property as a vacant possession. Mr Nugent agrees. "That way you will have better control over how your property is presented, which may well have a big impact on what it sells for in the end."