Selling a Tenanted Property in New South Wales: A Complete Guide

Under the Residential Tenancies Act 2010 (NSW), tenants retain the right to quiet enjoyment of the property even when the landlord has decided to sell. This means the tenant is entitled to continue living in the property according to the terms of their existing lease agreement, and the landlord cannot evict the tenant simply because they wish to sell.

, a 12-month lease), the lease survives the sale of the property. When ownership transfers at settlement, the new owner steps into the landlord's position under the existing lease.

The tenant keeps the same rent, bond, and lease terms. The only exception is if the contract of sale includes a clause requiring vacant possession at settlement, which triggers a formal termination process.

Landlords should be aware that tenants are entitled to 14 days' notice before any open home or private inspection, and inspections must be conducted at reasonable times — typically between 8:00 am and 8:00 pm, with no more than two inspections per week unless otherwise agreed.

If a landlord wishes to sell with vacant possession — meaning the property is empty and ready for the new owner to occupy — the tenant must be formally terminated. The process differs depending on the type of lease. For periodic tenancies (month-to-month or week-to-week after a fixed-term lease has expired), the landlord must give the tenant a 90-day termination notice under Section 96 of the Residential Tenancies Act.

The notice must specify the termination date and the reason for termination (sale of the property). The tenant is not required to accept a shorter notice period, even if the landlord offers compensation.

For fixed-term leases, the landlord cannot terminate the lease early simply to sell the property. The landlord must wait until the fixed term expires.

If the lease contains a "sale clause," the landlord may be able to terminate early with a 30-day notice, but only if the contract of sale includes vacant possession as a term. The tenant may challenge the termination at the NSW Civil and Administrative Tribunal (NCAT) if they believe the notice is retaliatory or issued in bad faith.

An alternative to vacant possession is selling the property with tenants in situ — meaning the buyer purchases the property subject to the existing lease. Buyers who are investors seeking rental income may prefer this arrangement, as the property generates income from day one of ownership.

The advantages of selling with tenants include no vacancy period, no lost rental income during the sales campaign, the existing tenant can show the property (often leading to a more authentic presentation), and the buyer obtains an immediate income stream without needing to find new tenants. However, there are risks.

Some buyers may be put off by existing tenants, especially if they intend to live in the property themselves. The pool of potential buyers is narrowed to investors and those who can wait out the lease term.

The sale price may be slightly lower than a vacant possession sale, reflecting the delayed access. Landlords considering this route should have their conveyancer prepare a special condition in the contract clarifying the buyer's obligations under the existing tenancy.

Landlords selling a tenanted property in NSW have several exit routes to choose from. A private treaty sale to a direct buyer like ROAME Australia is often the simplest path for tenanted properties, as direct buyers typically purchase with tenants in situ and handle the transition. This avoids the need for tenant termination, vacant possession costs, and real estate agent commissions.

A traditional agency listing requires the agent to schedule inspections with 14 days' notice to tenants, which can lead to tenant pushback, missed inspection slots, and a disrupted campaign. An auction campaign adds further pressure, as the tenant must vacate for 30 minutes on auction day — which some tenants will not accommodate.

Direct buyers who are portfolio investors are generally the most flexible purchasers for tenanted properties, as they value the existing income stream and understand tenancy management obligations under the Residential Tenancies Act.

Tenants whose quiet enjoyment is disrupted by excessive inspections, poor notice compliance, or pressure to vacate may seek compensation through NCAT. Under Section 44 of the Residential Tenancies Act, a tenant can apply to NCAT for an order reducing rent (rent abatement) if the landlord's actions substantially interfere with the tenant's use of the premises. The tribunal can also award compensation of up to $15,000 for loss of amenity.

Landlords should maintain a written log of all inspection notices served, inspections conducted, and tenant communications during the sales process. Any failure to observe the 14-day notice rule or conducting more than two weekly inspections without agreement can form the basis of a compensation claim.

Sellers are strongly advised to negotiate a mutual vacate agreement with the tenant before listing, offering a reasonable compensation payment — such as one month's rent and assistance with moving costs — in exchange for voluntary vacant possession.

Landlords selling a tenanted strata unit must also comply with the strata scheme's by-laws. Some strata schemes impose restrictions on short-term rentals, the number of tenants permitted in a unit, or the use of common property during inspections.

The landlord should request a Section 184 certificate from the owners corporation before listing, which confirms the current levy status, any special levies scheduled, and whether the by-laws permit the current tenancy arrangement. Buyers purchasing a tenanted strata unit will inherit the landlord's rights and obligations under the by-laws, including the right to enforce by-law compliance against the tenant and the obligation to pay strata levies.