Half of all investment properties are resold within two years of being tenanted, according to new data from the Australian Housing and Urban Research Institute (AHURI)[i].

The research report, Modelling landlord behaviour and its impact on rental affordability: Insights across two decades, explores what drives small-scale landlords to buy, sell, or hold onto their rental properties.

Interestingly, nearly a third of landlords hold a rental property for more than 20 years. This suggests there are at least two distinct investment strategies at play—short-term investors and long-term holders.

Senior lecturer from Curtin University and lead author of the research Dr Ranjodh Singh said those who are well-positioned to buy and retain rental investments contribute to a more stable supply of long-term private rental housing.

“However, landlords who are ill-positioned to retain their rental investments for long can disrupt the supply of private rental housing, with potentially negative impacts on tenant affordability and security,” Dr Singh said.

Long-term landlords are likely to be wealthier than non-landlords

Unsurprisingly, landlords who buy or keep their rental investments for longer tend to be in their late 40s or early 50s, married, employed full-time, and have higher incomes and homeownership rates than the general population.

Perhaps more unexpectedly, younger people aged 25–34 years are more likely to buy a rental property compared to other age groups. However, these younger landlords are also likely to sell their property sooner, in essence becoming ‘short-term’ landlords.

“The evidence suggests that either they are more willing than older groups to cycle in and out of rental property investment or that they are more susceptible to becoming financially stretched and are forced to sell,” Dr Singh said.

Landlords sell rental properties due to life transitions or financial difficulty

According to the research, landlords are generally more likely to sell their investment properties if they are separated, unemployed, own a home with a mortgage, live in a low or moderate-income household, or do not have post-school qualifications. The report recommends education programs to help less-qualified landlords retain properties and support long-term rental supply stability.

Investment property sales disrupt rental stability and leave tenants feeling unsettled

On the flipside, Dr Singh told the ABC that selling a property often brings a rental agreement to an end, which can be "quite distressing" for tenants living in the home.

"You have to move out and look for another place to live and that happens at a very short cycle, about two years or less.

"It gives you that precarious feeling that you're not quite settled … you might have kids going to the school, or you might have an employment that's next door, and it seemed like a perfect fit, but now you have to move out and possibly move far away from all these things."

Considering buying an investment property this autumn? Contact your local Raine & Horne agent to find out more about what’s available in your suburb, town or region.

[i] https://www.ahuri.edu.au/analysis/news/landlords-are-key-rental-housing-stability-new-research-finds-two-very-different-investing-behaviours