5 things you need to know when selling your rental property
When you decide the time is right to sell your rental property, there are certain rules you need to be aware of.
If an owner puts the property on the market, they must tell the tenant in writing. As a courtesy, and to promote good relations between the sales team and the tenant, they should let the tenant know beforehand through their property manager.
Your property manager must seek permission before you organise for a photographer to enter the property to take marketing photographs. Be aware your tenant can refuse to allow their personal possessions to be in any photograph. Even if permission is granted, at any stage, if the tenant feels their privacy has been violated they can cause problems, so you would be best to advise the sales team not to photograph tenants’ possessions.
3. Access to the property
Owners, and their real estate sales consultants, have the right to show possible buyers through the house. They can also show through a registered valuer or a building expert they’ve employed to prepare a report. But the tenant must give permission first.
A tenant can’t unreasonably refuse access, but they can set reasonable conditions. For example, they can: Limit access to certain times of the day and days of the week; refuse open homes and auctions on site; ask to be present during open homes.
Tenants can insist that the property be shown by appointment only.
Before including open homes or an on-site auction in the sales plan, the owner should discuss all this information with the tenant. Consent needs to be given for specific dates and times, and should be put in writing.
It is a good idea to offer the tenant an incentive to stay in the property and to work with the sales team. An idea would be to offer the tenant a week rent free once there is an unconditional sale on the property. If you are wanting more cooperation from the tenant than the usual viewings, say to hold open homes or have an auction on site, then you may wish to consider offering two weeks rent.
It is important to note that should you wish to keep any part of the bond that the tenant has lodged against their name, then these arrangements must be made prior to a sales agreement being reached. Once you have put on the agreement a bond amount then that is the figure that MUST be transferred to the new owner.
4. Once sold
When sold, if the new owner intends to keep on the same tenants, the tenants should be told who the new owner is and when they’ll take over. Ask your property manager to provide the new owner with a copy of the tenancy documents and arrange for the bond to be transferred. If you have received good service from your property manager, it may be an ideal time to recommend that the property be kept under the same management structure to minimise any disruption to the tenant.
When the property is sold, the original landlord’s interest in the bond will pass to the new landlord.
If the property is sold to someone who doesn’t want to keep on the tenants, one of the conditions of sale will be “vacant possession”. The owner must give the tenant at least 42 days’ written notice to end the tenancy, so the house will be empty for the buyer. Please remember to add on the appropriate ‘service days’ to any notice to vacate. If the notice is posted to the property, then four working days must be added. This can be reduced to two days if the notice is hand delivered to the property and can be immediate if the notice is emailed, faxed or handed in person to the tenant – always remembering that the actual notice period starts the following day from the end of any notice period.
5. Fixed term tenancy
A landlord or tenant cannot give notice to end a fix-term tenancy early. So, if the property being sold is rented for a fixed-term, the property must be sold with the tenancy and tenants in place. The buyer will become the new landlord for the rest of the fixed term.
The landlord may be able to sell the property empty if the tenant agrees, in writing, to end the fixed-term early. This will usually involve some sort of compensation for the tenant.