How to sell an Investment Property while it is still tenanted
Selling an investment property that is occupied by tenants is an easier process if you are aware of the do's and don'ts.
Whilst selling an investment Property that is tenanted can be more problematic than selling an empty house, it can be done if you follow a few simple rules.
- Be aware of the leasing rules in your state
- Notify your tenants the house is for sale
- Provide your tenants with appropriate notice of planned inspections.
Be aware of the leasing rules in your state
Landlord need to be familiar with the leasing laws of the state the property is in because the types of notices you should give your tenant and when these should be given vary.
Notify your tenants that the house is for sale
In some Australian States, the Landlord must notify the tenant that the property has been placed on the market.
In New South Wales, for example, a landlord must give the tenant written notice of the landlord’s intention to sell the property. The notice must be given no later than 14 days before the premises are first made available for inspection.
These notices are generally of a prescribed format as set down by legislation and these notices are included in our Premium Tenancy Kits.
Sample image of a Notice of Intention to Sell the Premises - these notices generally follow a prescribed format and need to include particular information to comply with the residential tenancy legisaltion.
Notify your tenants of inspections: showing the rental property to potential purchasers
A Landlord can show a property to potential purchasers, regardless of whether or not the property is tenanted.
If the property is tenanted, a Landlord is required to give appropriate notice. The notice requirements differ, depending on the State the property is situated in.
In New South Wales, a landlord must make all easonable efforts to agree with the tenant as to the days and times when the property is to be periodically available for inspection by prospective purchasers. A tenant cannot unreasonably refuse to agree to certain days or times during which the property is to be routinely available for inspection, but the tenant is not required to agree to more than 2 times a week.
In Victoria, a Landlord has the right to enter rented premises to show the property to a prospective purchaser at any time agreed with the tenant. The tenant must have agreed not more than 7 days before the entry. Otherwise, where the tenant has not consented – between 8am-6pm on any day (except a public holiday) if at least 24 hours’ notice has been given to the tenant.
What if the purchaser wants to move straight in?
If the term of the lease has expired, then the tenant can be given the requisite notice to vacate in accordance with the terms of the Lease and the residential tenancies legislation in your State.
If the Lease hasn’t yet expired, there is not much that can be done if the purchaser wants to move in. Unless the tenant agrees to break the lease early, the purchaser may want to reconsider the choice of property… or wait it out until the lease ends.
However, this too may differ from state to state. It is best to look to your Tenancy Agreement and the Residential Tenancies Act in your State or contact the Tenancy Department in your state for more detailed information.
Thinking of selling your investment?
You might consider placing a tenant on a shorter term lease that operates on a monthly basis, if you think it is likely that you will decide to sell your property in the near future.
By Ian MacLeod