Our blog.

There are advantages and disadvantages to selling a property with a tenant still in residence. While tenanted properties can be appealing to buyers looking to purchase an investment property and guarantee the owner’s income stream until the property sells, on the other hand, it may be a turn-off for some buyers and make the sale process more challenging for an owner.  

In this blog, our agents provide some top tips to help you sell a tenanted property as seamlessly as possible.

Understand the rules around selling tenanted properties

As a landlord, while you have the right to sell your property, there are several provisions which govern the sale of a property when it is tenanted.

Australian tenants have rights under two legal frameworks, namely the Residential Tenancies Act and the Residential Tenancies Regulation. If you decide to sell the premises, you must follow all laws relating to accessing the premises, notice requirements and the tenancy agreement.

Laws vary by state but generally stipulate:

• Tenants on a fixed-term lease cannot be forced to move out of the property.
• Tenants on a periodic lease must be given appropriate notice to vacate, according to the state in which they reside.
• Tenants must keep the home in a reasonable condition, but they are not required to do additional work to make the house presentable for sale.
• Tenants must be given the appropriate notice before the property goes up for sale and before inspections.
• As a general rule, tenants can refuse the use of photos which show their personal belongings.
• Tenants can deny entry for an unreasonable number of viewings – two viewings per week are generally considered reasonable.
• The buyer must continue the lease as usual and give appropriate notice if they want the tenant to move out after the lease expires.

It’s important to know what rules apply to your property, factor in any liaison you might need to do with your tenants to get your property ready for sale, and make sure any provisions are accounted for in the contract of sale.

Communicate openly with your tenants

As you can see, many laws apply to the sale of a tenanted property; therefore, it’s important to open lines of communication with your tenants early.

It is critical to inform your tenants that you intend to sell before you put the property on the market. By fostering open and honest communication with your tenants, you can create a more harmonious relationship that could aid the sale. 

Give plenty of notice, be reasonable about the number of inspections you intend to hold (and flexible about the days and times when they will happen) and offer the tenants themselves the opportunity to buy the property.  It's also a good idea to keep the tenant up to date with the sale progress and what will happen at each stage, including when the contract is signed.

Prepare the property for sale

Putting your best foot forward in terms of presentation can pay off generously at sale time, plus anything you spend could be tax-deductible. Having residing tenants generally gives you less control over the property’s presentation to potential buyers, and if the property is poorly presented this may affect the ultimate sale price.

Most tenants will do the right thing, but they are not obligated to do a thorough clean in and outside of the property if you happen to be selling. With this in mind, you may like to offer to pay for a cleaner to help the tenant out with the presentation of the property (and a gardener if you have an outside space) before you take promotional photos or conduct inspections.

Learn more about how to prepare for your sale in our article Preparing to sell a property checklist.

Offer tenants an opportunity to end the lease early

When selling an investment property, an owner will usually weigh up whether selling it with tenants in place is the right approach for their sale. Selling a vacant property may give you increased opportunities for cleaning, repair work and inspections.

As we already mentioned, a tenant with an ongoing fixed-term lease cannot be forced to vacate a property by law. However, it may be the case that your tenant is already thinking about moving, so it is worth finding out if they might be interested in ending the agreement early. You could also consider offering them compensation in return, such as a rent reduction, waiving the bond cleaning costs or assisting them with moving costs.  

Make sure your requests are as friendly and pressure-free as possible – and remember they have the right to say no. If their answer is yes, be sure you get all agreements between you in writing.

Get professional support

As you’ve just read, it pays to prepare. The best form of preparation is a qualified real estate agent who can guide you through all of the steps above and make sure you comply with any state or federal laws.

Our agents know the market and legalities of tenancy agreements and can guide you to achieving the best outcome for your property. 

To achieve your selling goals sooner, find a Belle Property agent near you now.  

Learn more about the process of selling and search our wide selection of premium homes for sale in lifestyle locations.