As a property investor, there comes a time when you need to sell. There may be an improvement in market conditions and sales in your area are booming. You may be looking to reinvest in another area or investment altogether. Or you could just want out of your investment. No matter the reasons, the time will come when you are ready to sell your investment property. We have previously discussed the best time to conduct renovations on your investment property, now we look at what to consider when selling a tenanted property.
Things to Consider when Selling a Tenanted Property
As a landlord, you are able to sell a property when it is tenanted. However, there are rules and regulations to abide by and that will govern the sale and ongoing leasing of the property.
Advising the Tenant of Intent to Sell
It is common courtesy to advise your tenant as early as possible of your intent to sell. It will allow them to come to terms with the sale and to prepare for the upcoming inspections. As a tenant, finding a new home will be both a cause of financial and emotional stress. So as a landlord, it is important to consider these emotions your tenants may be going through when selling their ‘home’.
Offer the Sale to the Tenant First
It is common courtesy to also have the discussion with your tenant about the prospective sale. If they love their home, they may be wiling to purchase and place an offer. Giving them right of offer is a courteous gesture and may result in an immediate sale.
Open Home and Inspections
You have the right to access your property for open homes and inspections, however you must:
- Advise your tenant at least 14 days prior to when the property is available for inspection.
- Agree upon days and times available for inspection.
Tenants have the option to refuse open home inspections and opt for private inspections only. For any inspections, you must:
- Not enter before 8am or after 8pm
- Conduct inspections on a Sunday or public holiday
Property Photographs & For Sale Signs
You are permitted to take external photos of your property for marketing purposes. If tenanted, a tenant can refuse for internal photos to be taken and advertised in the sale of the property due to privacy issues. Tenants can also refuse for a ‘for sale’ sign to be erected due to privacy issues as well if the property is a house.
The Rights of the Tenant
Ending the Lease
A tenant has the right to terminate their residential agreement (lease) if you have not informed them of the intent to sell prior to entering into the agreement. They can give 14 days notice of their intent to leave if on a fixed term lease. If no lease is in place, they can give 2 days ‘no reason’ notice.
If your tenant wishes to stay, you cannot force them to leave on a fixed term agreement. Once the property sells, the new buyer takes over as landlord on the same lease terms. The new landlord must honour the fixed agreement in place until it is up for renewal. The tenant does not need to sign a new agreement. They simply pay their rent into the new bank details. If on a periodic agreement, as landlord you can issue a 30 day notice of termination if you ave entered into a contract of sale and one that requires vacant possession.
Keeping your Tenants Onside
It is always a welcome offer to tenants when you are selling the property, to offer a discount in rent during the sale period due to the inconvenience caused. Offering a discount of their weekly rent is a good way to keep them on side and help to present your property in a clean and tidy manner.
For more information about selling your tenanted property, or to check your rights as a tenant, visit the NSW Department of Fair Trading. They have a lot of useful information for both parties to help your selling process be a smooth one.
