Selling a Tenanted Property: What Owners Need to Know

Selling a property with a tenant in it is common and perfectly workable, but it narrows your buyer pool and adds obligations you do not have with a vacant property. The owners who do it well decide early which buyer they are selling to.

Investor or owner-occupier — pick one

A tenanted property with a long lease remaining is attractive to an investor, who is buying an income stream and would rather not find a tenant themselves. The same property is much less attractive to an owner-occupier, who cannot move in until the fixed term ends.

If your property is the sort an owner-occupier would want, selling with vacant possession usually produces a better price. If it is a typical investment property, a good tenant on a solid lease is a selling point. Decide before you advertise, because it changes the copy, the photography and the price.

Know what the lease actually allows

A sale does not end a tenancy. If there is a fixed term running, the buyer takes the property subject to it. Inside a periodic agreement, notice periods to end a tenancy for sale differ by state and are longer than most owners expect. Check your state’s residential tenancies legislation, or ask, before you promise a buyer vacant possession.

Entry and inspections

You cannot show the property whenever you like. Every state sets rules on written notice, frequency and reasonable hours for entry to conduct inspections during a sale campaign, and photographs of a tenant’s possessions generally require consent. Plan the campaign around those constraints rather than against them.

Bring the tenant with you

This is the practical difference between a smooth campaign and a difficult one. Tell the tenant early, in writing, what is happening and what it will mean for them. Be flexible about inspection times, keep the number of inspections down by grouping them, and consider a rent reduction for the campaign period if you are asking a lot. A tenant who feels respected presents the property well; one who feels ambushed does not.

Disclose the tenancy properly

The contract of sale should state the tenancy details: the term, the rent, the bond amount and where it is lodged, and any arrears or outstanding maintenance. Your conveyancer or solicitor will prepare this, and the bond is transferred to the new owner at settlement.

Advertising it yourself

A tenanted sale is well suited to a private campaign, because investors are comfortable reading numbers off a listing. We list your property on realestate.com.au and up to nine other sites for a once-off $799 until sold, with no commission — see the residential sale page, or the commercial sale page for tenanted commercial property.

Call 1300 622 300 with questions.