Selling property can be stressful, but it’s even more complicated when there are tenants involved. Your tenants have legal rights and there are rules you need to follow before the deal can go ahead.
To make life easier, you may wonder if it’s best to wait until the property is vacant. Selling a tenanted property does have some benefits, though. You’ll still receive rental income during the sales process, while having a tenant in the property may appeal to investors and help you sell it faster.
There are just a few things you need to bear in mind when selling an investment property that is tenanted.
4 things to be aware of when selling a tenanted property
1. You should inform your tenant of your intention to sell
When your property goes on the market, your tenants’ lives will be disrupted by visits from tradies and house-hunters. Inform them in writing before you start the sales process so they’re prepared. That way, they’re more likely to be cooperative.
2. You must give your tenant notice before open homes
Most states mandate that landlords must give tenants at least 24 hours notice before property visits and inspections. Some states, however, require 48 hours notice, so check with your agent or property manager. Of course, the more notice you can give a tenant, the better. It gives them ample time to tidy up the property before a viewing.
3. You can’t end a fixed-term lease early
By law, you cannot end a fixed-term lease early or evict a tenant. You can, however, discuss ending their tenancy early with their consent and on a date agreed upon by both parties.
On periodic agreements, should a tenant’s lease still be in place when the new owner takes over, they are within their rights to stay in the property until the lease ends. If the new owner prefers that the property be vacated upon settlement, you will need to give written notice as per your state’s legislation.
For most states, the notice period is 60 days, but this varies from state to state. Western Australia and NSW require 30 days. Tasmania requires 42 days.
4. You need to request permission for on-site signage and indoor photos
Landlords are allowed to take photos of the property exterior, but when it comes to interior photos, you need the permission of the tenant. The same may apply to placing signage on the grounds. Most tenants understand that sellers need to market the property and don’t have a problem with this.
While you are the owner of the property, tenants also have rights. Working with your tenants rather than against them will help you maintain a positive relationship and prevent legal problems.
Some landlords even offer their tenants a small rent reduction as a show of goodwill — a way to compensate for the inconveniences they are subjected to during the sales process. Remember, a cooperative tenant that allows you easy access to the property means you’ll be able to sell the property faster.