Selling a tenanted rental: your responsibilities as a landlord

You’ve decided to sell your rental property. But have you checked what your responsibilities are to your tenants? Below we outline the steps that landlords must take to make the process smooth and pain-free for all parties.

Let your tenants know

Letting your tenants know of your intentions is more than mere courtesy. It is legally required and must be done in writing.

At Lodge, we recommend giving your tenants as much warning as possible and providing your written notice in a face-to-face meeting. This gives your tenants a chance to ask any questions they may have.

Get their permission to access the property

You might own the property, but it is still your tenants’ home. As such, you will need to get your tenants’ permission to access the property for:

• Pre-sale maintenance and touch-up work.
• Photos for the property listing.
• Open home dates and times.
• Buyer viewings through the property.
• Property inspections (e.g. builder’s inspection).
• Onsite auctions.

It’s also worth noting that as part of their right to quiet enjoyment of their home, a tenant can:

• Refuse to allow you to take photos of their possessions.
• Refuse to have open homes and only permit property viewings by appointment instead.
• Refuse onsite auctions.
• Limit your access to the property to certain times and/or days.
• Be present during open homes. 
• Can ask for a rent reduction for agreeing to hold open homes (however, the landlord does not have to give it).
  
  

Read more: Selling a property guide

Get sign-off on the schedule

To ensure a smooth sales period, write up a list of agreed dates and times for any property maintenance, photography, open homes and any auction you have planned. Both you and the tenant should sign this and keep a copy.

If the tenancy will continue after you sell

If your tenants are on a fixed-term tenancy, the new owners must honour that agreement until the fixed-term agreement ends. As the landlord, you must notify your tenants of when the new owners will take possession of the property.

As the departing landlord, it is not your responsibility to provide the details of the new owner. This is the responsibility of the new landlord.

Can I end a fixed-term tenancy after selling?

It is possible to end a fixed-term tenancy if both you and your tenants agree. However, you cannot force a fixed-term tenant to leave if they do not want to. For this reason, ending a fixed-term tenancy after you’ve sold the property can be a very expensive exercise. You risk missing your settlement deadline and incurring a fine for not meeting your conditions of sale obligations. You may also need to cover the cost of your tenants’ relocation.

For this reason, we recommend that landlords approach their tenants as early as possible about ending a fixed-term tenancy by mutual agreement before they put the property on the market. Even in this scenario, you may still be required to cover the cost of your tenants’ relocation and storage fees.

Read more: Can I end a fixed-term tenancy?

If the tenancy will end once you sell

If your tenancy agreement is a periodic tenancy and the new owners want a vacant possession, then you must give your tenants at least 90 days’ notice to vacate the property.

If a vacated property is part of the conditions of sale, the house must be empty at the time of settlement.

Learning to manage a rental property can be a steep learning curve, but with our guide, you can learn the essential (and legal) need-to-knows of being a landlord.