Reasons why your property isn’t tenanted

Property investors often rent out properties as a means of earning passive income. However, there may come a time when your property has not been tenanted for awhile.

Property Observer speaks to property management specialists, and property analysts to help determine why your property has not been taken up, and how you can change that.

The first thing a landlord should look at is how the property has been priced. Property management specialist Fiona Blayney and SQM Research director Louis Christopher both emphasise the importance of pricing a property appropriate to current market conditions.

“What’s important is no matter what type of market, the landlords meet the market. Don’t try to overprice the rental property. If they do, no matter what the market is, they won’t find a tenant,” Christopher said.

Blayney agreed with this view.

“Normally if a property hasn’t got a tenant in it, it comes down to the price,” she said.

“A big part of the pricing is the landlord not listening to the agent. A lot of landlords think the agent can’t be bothered getting a higher price – but an agent’s income is reflective of the value they want to achieve,” she added.

Blayney notes that renters have a dollar value in mind.

“If I am looking for a property and I want to spend between $500-$520, I'm just looking for properties in that bracket. A good agent considers what bracket it goes onto on the websites. If you put it at $510, it'll go to the $500-$550 instead of $450-$500 bracket,” she said.

To get the right price, Christopher recommends checking the vacancy rates in the area. SQM Research provides this data for free, right down to the suburb level.

In addition to that, he advises landlords to do their own assessment, watch the market closely and look at rental listings to get a realistic idea of the property market.

Consistent with every other market, the rental market is driven by supply and demand. An increase in demand will generally lead to an increase in rental prices as properties compete with each other. Conversely, an increase in supply or a reduction in demand will lead to a rise in vacancy rates and put pressure on market rents.

Christopher told Property Observer that the Australian housing market has been a “fairly tight” rental market in recent years.

“Vacancy rates for August are at around 2.1%, which is still reasonably tight. Anything under 3% is in the landlord’s favour,” he said.

He revealed that vacancy rates have been slowly inching upwards since 2010, when the vacancy rate stood at about 1.7%. Other factors that affect vacancy rates include seasons. He notes that rates are usually high around Christmastime, and drops back down after.

Vacancy rates also vary greatly depending on city and region.

“In Melbourne we are generally recording higher vacancy rates of around 2.7%. This is due to the increase of accommodation in the last three years – an increase in house and land packages and multi-storey buildings in Southbank and Docklands,” he said.

He added that planning laws and restrictions in Victoria are more flexible than New South Wales, which could have contributed to the recent influx of accommodation.

“To be fair too, we’ve noted that the vacancy rate in Melbourne has remained largely unchanged for the last 12 months, outside of seasonality. In 2011 there was a rising trend; I find it interesting that it hasn’t further increased, and the rate’s stable now. It implies that demand is meeting supply in this particular instance – the situation hasn’t worsened for landlords,” he said.

The Sydney rental market is “relatively tight”, with a vacancy of 1.8%.

“It is slowly trending up. Back in early 2011 it was around 1.5%. There’s been a slow rise, and the market’s definitely favouring landlords at this point,” Christopher revealed.

Away from capital cities, there are areas around Australia where the rental market is greatly affected by seasonality. Coastal regions like the Gold Coast often see higher vacancy rates during the winter months, while rates tighten during summer months.

Besides pricing your rental property correctly and putting it on the market during the right season, Christopher advises landlords to be particular about the tenant. 

“I would rather have stable rent if I’ve got a good tenant in place looking after the property. It’ll mean a lot less maintenance and stress. Having a good tenant is worth their weight in gold – I would talk to the tenant a lot before lifting the rent,” he said.

Property management specialist firm Let’s Rent’s director Lisa Indge seconds this view.

“When you’ve got a tenant in a property that’s presenting it very badly – things everywhere, unmade beds, do you want to show it in this condition? I would wait for the tenant to move out before making sure it’s clean, neat, and tidy before presenting it to the rental market,” she said.

She also mentioned it should only take three weeks to lease most properties. During those three weeks, agents and landlords need to take note of what kind of queries you’re receiving, and what are the competing properties in the area.

Indge notes that many tenants choose not to rent a property because it is dirty and hasn’t been well maintained.

“A lot of agents out there don’t communicate with their landlord about the condition of the property. If it’s not renting, they say the market’s dropped when really, people are walking in and going, ‘It’s disgusting,’” she said.

She added that owners really need to repaint their properties every five years or so.

“When a property looks tired, appeal drops dramatically,” she said.

Other factors that deter tenants from renting a property include dirty carpets, a lack of light, and coloured walls.

“No feature walls unless it’s in a neutral tone,” Indge emphasised. “You can put mirrors to try and maximize the light in the property.”

“You also need to be aware of how long your kitchen and bathroom are going to last. The more neutral the colours, the better. Doesn’t matter if it’s built 20 years ago, so long as it’s neutral and not offensive, it’s not going to be a major turnoff as long as the condition is good,” she said.

Blayney also notes that little repairs sends a message to prospective tenants about the landlord’s “care factor”.

“If there are scuff marks and such, get a handy man in there and get him to go over the superficial elements to make it shine,” she said.

Lastly, Blayney recommends doing your research as if you were a tenant. Ask the questions you would ask if you were renting the property. Don’t reuse old photos as things may have changed. For instance, old photos may show a freshly planted garden, whereas a few years down the track there are now trees. All these could be introduced into the campaign.

“Photos tell a thousand words. Professional photos or choosing an agent that knows how to take photos using their SLR is a highly undervalued concept. Nowadays you can get five professional shots taken for $150 and that’s definitely worth the investment,” she said.

Diane Leow

Diane Leow

Diane has spent her entire career in the world of digital. She is passionate about delivering the best content to a world that is becoming increasingly jaded by the news. She also believes in the importance of great journalism and how it can change the world. Oh, she also drinks a lot of coffee.


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