Thinking of selling your investment property? Here is what you need to know:

Selling a property can be stressful for anyone, including yourself and your tenants. Therefore, it is a good idea to familiarise yourself with your rights and responsibilities as a landlord before beginning the process of selling your investment property to avoid any issues arising.

Letting your tenants know you’re going to sell the property.

You must inform your tenants (in writing) once you have signed a listing authority agreement with your real estate agent.

You can find notice templates here.

Access to the property.

Landlords need to get the tenants’ permission before entering the property to take photos and before publishing any marketing material that includes photographs of their possessions. Tenants have the right to refuse the use of any pictures containing their personal belongings, however, must provide reasonable access to the property.

Landlords must also seek permission before hosting open homes, conducting private viewings, or having other professionals through the home. This includes real estate agents, builders or valuers.

While tenants can’t unreasonably refuse access to the property, they can set reasonable conditions that must be met.

Tenants may:

Limit access to particular days of the week and/or times of the week.
Refuse to allow open homes and auctions to be hosted at the property.
Insist that all viewings with potential purchasers are by appointment only.

Tenants may ask for a temporary rent reduction in return for permitting open homes. Although, the landlord is not obliged to grant this. It is within the tenants’ right to remain present in the home at all times, including during open homes and private viewings.

Communication and negotiation should be a top priority throughout the process of marketing and selling your investment property. Consider creating a schedule of access that is suitable for all parties. We recommend that this schedule is put in writing and signatures from all parties are obtained to avoid any issues.

To avoid any conflicts or issues arising while marketing your property, you may consider selling your property without tenants. If you want to market your property without tenants, 90 days notice is required and you must not market the property until the tenants have vacated. Please be mindful that once the tenants have moved out, you must market the property within 90 days.

What if the new owner wants the tenants to stay?

The sale and purchase agreement must specify if the purchaser wants the tenants to stay. In this instance, the new owner, or their property management company, will become the landlord.

If the tenant will be staying and the buyer has requested a pre-settlement inspection, all parties must agree. This includes the tenant.

Rent can be collected until the settlement date. If your tenant has paid rent in advance, this will need to be passed on to the new owner.

What happens if the new owner purchases the property with vacant possession?

Periodic tenancy

If your tenants are on a periodic tenancy, and the buyer wants to purchase the property with “vacant possession”, the landlord will need to give at least 90 days’ written notice to end the periodic tenancy.

Please note, this may impact the settlement day of the property. We recommend that settlement takes place no sooner than 4 days after the tenancy has ended. This provides your property manager with ample time to end and finalise the tenancy.

You may want to consider using a settlement notice that accounts for these extra 4 days.

For Example:

“94 days after this offer in unconditional/accepted, or 4 days after the tenancy has ended, whichever is sooner”.

The benefit of this method? If the tenant has been given 90 days’ notice but is able to find a new rental property prior to that date, they can present their 28-day notice and the new owners can take over the property 4 days after the tenants have vacated.

Fixed-term tenancy granted on, or after, 11 February 2021

The landlord can end the tenancy on the fixed term expiry, or later, with 90 days’ written notice if they will be putting the property on the market for sale.

Fixed-term tenancy granted before 11 February 2021

The landlord can end the tenancy on expiry in accordance with the rules that were in place before the February 2021 law changes.

If the landlord terminates a tenancy under this new termination reason, they cannot put the property on the market for sale until the tenancy has ended. During this time, the landlord can make preparations (i.e. obtaining a property appraisal or taking photographs) provided that the tenant gives permission.

However, the landlord can prepare to market the property (i.e. obtaining a property appraisal or taking photos) if the tenant gives permission. After the tenancy has ended, the landlord must put the property on the market within 90 days.

You cannot end a fixed-term tenancy early unless the tenant agrees in writing. If the tenant disagrees, the property needs to be sold with the tenancy agreement in place.

Click here to read more about ending fixed-term tenancies early.

What happens after the property has sold?

Once the property has sold, the landlord must inform the tenant of the purchasers’ names and when they will be taking possession of the property. The landlord must also provide the new owner with a copy of the tenancy agreement.

When the new owner has taken possession of the property, they need to tell the tenant:

Their name
Their contact details and an address for service
How to pay their rent (i.e. provide the new bank account details).

If Tenancy Services hold the bond for the property, you and the new owner must complete a Change of Landlord form. If you are currently holding the bond and pass it on to the new owner, you will not be able to make any claim on the property after settlement. Landlords should seek independent advice to ensure any claim to the bond will not affect the sale and purchase agreement.