5 things you must know before selling your investment property with a current tenant

If you are looking to sell your property while you have an existing tenancy agreement in place, there are some special requirements you need to follow. Selling your property in this situation requires a balancing act between yourself, and your tenant in order to comply with the Residential Tenancies and Rooming Accommodation Act 2008, and get the best outcome from your sale.

It is important that if you have the intention to sell your property soon, you plan ahead. We have an article outlining 6 factors you should consider before selling your investment property here. With a good plan for how and when you will sell your property, you will be able to better negotiate with your tenant and provide greater notice on inspections. In some cases, you may be able to mutually end the tenancy agreement early after a discussion with them.

If you continue to pursue selling your property while you still have an active tenancy, here are 5 things you need to know.

1. Remember the fixed term agreement has priority

If you are selling your investment property while you have an existing tenancy agreement, the first thing you should know is that the tenancy agreement always takes priority over the sale. This means that throughout this time you must continue to honour the agreement, and all the protections provided to the tenant. The tenancy agreement will also be passed on to the new owner after the sale.

It is important to note this before you begin the sales process to minimise potential disputes and keep the sales process as smooth as possible.

2. Notify your tenant you are selling the property

The second step you should take is to notify your tenant that you are selling the property. To start here, complete the “Notice of Lessor’s Intention to Sell the Premises” form and provide it to the tenant. Your agent who is selling the property should also provide a copy of this form to your property manager. In this notice should be the intention to sell the property, the details of the agent selling the property, and the selling strategy.

It is also important to note that if you list the property for sale during the first two months of a periodic or fixed-term agreement, without written notice of intention to sell prior to the agreement being signed, the tenant can give a notice of intention to leave with two weeks’ notice.

3. Provide notice before inspections

When looking to conduct inspections it is extremely important that all guidelines are followed. This means that you will be required to provide a minimum of 24 hours’ notice to the tenant when you wish to enter the property. The selling agent also must be able to show written proof of their appointment if asked by the tenant before they can enter the home.

You also need to ensure that all requests for entry are at reasonable times. Unless the tenant agrees in writing, you should not enter before 8am or after 6pm. You should also not have inspections on Sundays or public holidays, again without written consent.

4. Gain approval for an auction or open house

It is vital that you discuss your selling strategies with your tenant before you begin selling the property. This is because you need written permission from the tenant before you can use certain sales strategies, including onsite auctions and open homes. The tenant is not required to permit you to use these strategies, so ways the impact of these strategies can be reduced should be discussed with the tenant in order to gain their approval.

In terms of advertising the property, images showing the tenant’s possessions must also have written permission from the tenant before they can be used. This is to ensure their privacy.

Working with your tenants through this process is incredibly important to ensuring that the sale of your property goes as smoothly as possible. Agree upon dates for inspections, open homes, and even auctions ahead of time. Provide plenty of warning and be prepared to offer some concessions to your tenant in order to create a mutually beneficial arrangement.

5. What happens after the sale?

It is important to note that once the property has been sold, the fixed-term lease with the existing tenant passes along to the new owner. This lease must be honoured by the new owner. The tenant and new owner can, however, negotiate to end the tenancy on mutual terms with the tenant potentially receiving some compensation.

If a periodic lease is in place different rules apply. The agreement must still be honoured, however, if the new owner requires a vacant property, they only need to provide four weeks’ notice from when they signed the contract of sale.

For a fixed-term agreement, a letter must be provided to the tenant advising them of the following:

  • The new owner of the property
  • The new owner, or the property manager’s, contact details.
  • Where they are required to pay rent.

As well as this, a change of property manager/owner form must be submitted to the RTA to manage the changing of the bond.


It is important during this time that you and your tenant maintain open communication. Understand that this time could be invasive to your tenant’s privacy, and so, should be treated with care. The best path to take is to negotiate a mutual ending of the tenancy, with some compensation provided to the tenant, rather than selling the house while the tenant is living there. However, if this is not possible, ensure you follow the above tips to make the process go as smoothly as possible.

If you have any more questions about selling your investment property, come have a chat with Link Living.

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