Selling your investment property with a lease agreement in place

01 June 2021

If the time comes for you to think about selling your investment property and there is still a tenant and lease agreement in place, it can often be seen as a big problem. This situation doesn’t have to be a deal breaker, there are just a few more elements to take into consideration and as long as selling agents are upfront with the facts, many buyers are happy to work around these situations.

While it is legal to sell an investment property with a current lease agreement in place, there are a few extra ‘moving parts’ to consider, and like all of these things there are pros and cons.

The first thing to look into is your tenants’ rights, and these differ from state to state. If your property is in NSW, click here for the NSW Fair Trading website.

Your selling agent will also be able to help you with current legislation around giving notice of intent to sell to your tenant as well as helping to gain access for open for inspections. For these open homes, tenants will need to be given fair warning and will also hopefully have an understanding that the home will need to be tidied for these showings on a regular basis. In order to maintain a good relationship with the tenant, it is always advisable to give the tenant more notice than necessary.

Pros of selling with a tenant in place:

  • You will still receive rent throughout the selling process
  • Buyers who are investors may be attracted to the fact that there is already a tenant in place
  • Having a good tenant living in the property paying consistent rent will give confidence to other investors.

Cons of selling with a tenant in place:

  • You will need to give adequate notice to tenants prior to each inspection
  • Tenants may be seen as an inconvenience to buyers who want to purchase the property as owner occupiers
  • Tenant styling may not present the property in the best way.

Some ideas for maintaining good relationships with the tenant during the sale process:

Selling a property with a tenant living in it can be a huge inconvenience to them, and it is important to understand how this can also be a stressful time for them. In fact, legislation in NSW states that if you haven’t let your tenant know at the time of signing the lease that you intend to sell the property before the lease period is over, they are within their rights to leave when you let them know that you intend to sell the property. If you want your tenant to stay around while you sell the property, there are some ways you can maintain a relationship and entice them to stay a little longer:

  • Give them as much notice as possible
  • Be flexible with inspection times
  • Communicate openly about the process and timeframe regarding the sale
  • Offer a rent reduction to give an incentive to stay on and make known they have been thought about in this process.

If your tenant decides they want to leave before the property goes to market, this then gives you the freedom to style and present the property in the best way possible. This also gives the selling agent greater freedom when it comes to open homes and showing through potential buyers out of hours.

If you’re planning to take advantage of the current market by selling your investment property, please get in touch with any of our agents who will be able to expertly guide you through this process. Our Sales and Property Management teams work closely together and are able to take any stress out of the situation by liaising with tenants and maintaining those open lines of communication.