Can I sell a property when it’s tenanted?
The short answer is yes, but there are several factors to take into consideration. Westons & Co has sold many tenanted properties in the Hills District over the past year, and we’ve compiled this handy guide to making the process as smooth as possible for all parties involved.
If your investment property is currently being managed by an external agent, we always suggest you transfer the management to Westons & Co when you’re planning to sell, in order to streamline the transaction. We ensure that the correct notices are issued and know from experience that it is clearer and more effective to communicate with three parties – the vendor, buyer and tenant – rather than four.
We advise our vendors to maintain tenancies while selling their investment properties for two key reasons: your rental income continues until you sell the property, and a tenanted property assures potential buyers who are looking for an investment property that it is a worthwhile investment for them, too.
Landlords’ responsibilities and tenants’ rights
In NSW, you have the right to sell your investment property even if it is during a fixed-term tenancy agreement (lease). However, you must provide written notice to your tenant of your intention to sell and 14 days’ notice before the first viewing of the property. It may be the case that you and your tenant can come to a mutual agreement to terminate the lease, if that suits you both; equally, if the lease period extends beyond the date of the sale, the new owner has to abide by the terms of the lease and can’t evict the tenant.
For detailed information about notice periods and ending tenancies, for both landlords and tenants, visit NSW Fair Trading.
It is in everyone’s interests to keep your tenant informed about your plans to sell. Your tenant may feel unsettled by the prospect of having their home owned by a new landlord or finding a new home if the situation arises, plus they also have to deal with the disruption of inspections while the property is on the market. Maintaining open communications is always advisable and if you want to keep your tenant happy and paying rent until the property is sold, it pays to go above and beyond what’s legally required.
Once you’ve given your tenant 14 days’ notice of the first property viewing (and ideally discussed your decision to sell the property with your tenant well before then), you need to give a minimum 48 hours’ notice for subsequent inspections – including building and pest inspections. According to NSW Fair Trading, tenants are obliged to keep the property in a “reasonable state of cleanliness” throughout their lease, and this applies for inspections as well.
As mentioned above, to keep the relationship with your tenant on a cordial basis be prepared to be flexible about inspection dates and times. Some landlords offer rent reductions to compensate for the inconvenience of inspections and it’s worth remembering your tenant has the right to be present during inspections. You should also be aware that if you want to photograph inside the rental home, your tenant must give their permission for you to do so.
However, the bottom line is that if you and your tenant can’t agree when to show the property, you have the right to inspect the property a maximum of two times a week after giving the required 48 hours’ notice each time.
If you are a landlord with a rental home in The Hills District or looking to invest in a property within the region and would like some local insights or property management expertise, please do not hesitate to get in touch.