Are you looking for selling a tenanted property in NSW? In this blog, we will go over some concepts to consider when you are selling a tenanted property or a rental property in NSW.
Firstly, let’s understand what is a tenanted property? If there are tenants who are renting your property, we refer to that as tenanted property. Property with tenants is a common form of investment property.
One of the most important considerations when selling a tenanted property in NSW is the rights of tenants. The buyer has the obligation to respect any tenancy agreement that is already in place. There are two important laws that govern matters in relation to sale of tenanted property in the state. These include:
As a prospective buyer who purchases property will continue to receive rent from tenants, it is often an attractive opportunity for purchasers. Read the sections below to learn more about this important topic under property law and conveyancing.
Selling a Tenanted Property in NSW: Things to Consider
Tenants’ Rights
Before anyone buys property, naturally, the first step for them is to inspect the property. So, how does this work when there are renters living in the property? The lessor (seller of property) or their agent can enter the property to show it to prospective buyers.
When doing so, they must speak with the tenant to ensure that it suits their schedule. Moreover, the lessor or their agent should also give suitable notice about the inspection to the tenant. They can also get in touch with the property manager (if any) to arrange this.
As we mentioned above, the landlord or agent has the right to enter the property to showcase it to potential buyers. However, they must adhere to the following guidelines:
- The landlord or agent must provide written notice to you at least 14 days prior to the first showing of the premises.
- They must make reasonable efforts to reach an agreement with you regarding the specific days and times for showing the property.
- It is important that you do not unreasonably refuse to agree to the proposed days and times for showing the premises. However, you are not obligated to agree to more than two showings per week.
In the event that you and the landlord/agent are unable to come to an agreement regarding inspection times, they may proceed with showing the premises a maximum of two times per week. However, they must provide you with a minimum of 48 hours notice prior to each showing.
Advertising
When promoting a property, the landowner or agent has the right to enter the premises to capture photos or videos of the interior. However, they must provide the tenant with reasonable notice and an opportunity to remove personal belongings that they do not wish to be captured by the camera.
It is strictly prohibited for the landlord or agent to publish any photo or image that reveals the tenant’s possessions without obtaining written consent from the tenant.
Within the 28 days preceding the property’s marketing or termination of the tenancy, the landlord or agent is permitted to enter the property for this purpose on one occasion.
If you are the tenant, and you find that the landowner and agent published certain photos and videos without your consent, you may consider making an application to the New South Wales Civil and Administrative Tribunal (NCAT).
Furthermore, the tenant can request an order for the destruction of the photos or videos, the prohibition of their use in advertising, and compensation for any financial loss suffered as a result of the publication. They must submit application within three months of the publication.
Additionally, the landlord or agent must obtain the tenant’s consent to install a “for sale” sign on the property. If a sign is installed without the tenant’s consent, the tenant has the right to remove the sign and apply to the NCAT for an order preventing any future installation.
This is because the installation of the sign infringes upon the tenant’s right to peace, comfort, and privacy at the property. It’s important to note that this rule does not apply if the property is part of a strata scheme, such as a unit in a complex.
Advantages and Disadvantages of Selling Tenanted Property
Selling a tenanted property in New South Wales has its own set of advantages and disadvantages. Here are some key points to consider:
Advantages of Selling a Tenanted Property in NSW:
- Steady Rental Income: When you sell a tenanted property, you can benefit from the steady rental income until the property changes hands. This can be particularly advantageous if you’re looking for immediate cash flow or if the rental market is strong.
- Attractive to Investors: Tenanted properties can be appealing to investors who are looking for rental properties with existing tenants. This may help you attract a broader range of potential buyers, including those seeking investment opportunities.
- Reduced Vacancy Period: By selling a property with existing tenants, you can avoid or minimise the vacancy period between tenants. This means you won’t have to bear the costs associated with advertising, screening new tenants, and potential rental income loss during the vacancy period.
- Proof of Rental History: A tenanted property provides evidence of its rental history, including the rental amount, tenant payment records, and any maintenance or repair issues. This can be beneficial in attracting buyers who value a property with a proven income track record.
Disadvantages of Selling a Tenanted Property in NSW:
- Limited Market Appeal: Some buyers may prefer to purchase properties that are vacant or where they can choose their own tenants. This can limit the pool of potential buyers, potentially affecting the demand and sale price of the property.
- Tenant Cooperation: Selling a tenanted property requires the cooperation of the existing tenants. While they have certain rights and protections under tenancy laws, their willingness to allow inspections and access to the property can impact the selling process. Uncooperative tenants could potentially deter buyers or complicate the sales process.
- Property Condition and Maintenance: Tenanted properties may have experienced wear and tear over time, depending on the tenants’ habits and maintenance standards. This could affect the property’s overall condition and require repairs or upgrades to make it more appealing to potential buyers.
- Lease Agreement Considerations: The terms and conditions of the existing lease agreement may impact the sales process. For example, long-term lease agreements could potentially deter buyers who wish to occupy the property immediately or make significant changes to it.
- Limited Flexibility: Selling a tenanted property may restrict your flexibility in setting the sale timeline. You’ll need to consider the notice period required by law to terminate a tenancy, which could delay the sale or limit your ability to negotiate closing dates.
Importance of Seeking Advice from Property Lawyers
It’s important to note that real estate laws and regulations can change, so it’s advisable to consult with a qualified real estate professional or legal advisor to understand the specific requirements and implications of selling a tenanted property in NSW at the time of your transaction.
If you have questions on vacant possession, periodic agreement or fixed term agreement, contact our lawyers. In case of fixed term lease agreement, the owner must provide a written termination notice. Sometimes tenants may choose to ends the fixed term tenancy agreement early if the owners are changing.
For more information, reach out to lawyers from JB Solicitors. Contact our team today.
