If you own an investment property with tenants, you may eventually face an important decision: should you sell with the tenants in place, or issue notice and market the property vacant? Both approaches have merit, and the right choice depends on your circumstances and priorities. At Irelands, we’ve guided countless property owners through this process. Here’s what you need to know to make an informed decision.
Understanding your two main options
The fundamental choice is straightforward. You can either retain your tenants during the sale process or issue notice to vacate before marketing begins. Each path has distinct advantages and considerations.
Selling with tenants in place allows you to continue receiving rental income throughout the marketing period. It can also work well for tenants who may be able to stay on if the purchaser is an investor. However, you’ll be presenting a lived-in property, which means relying on your tenants to maintain presentation standards.
Selling vacant gives you complete control over presentation. You can arrange staging, complete minor repairs, and schedule viewings without coordinating with tenants. The trade-off is the loss of rental income during the marketing period and the time required to properly issue notice.
The process of selling with tenants in place
If you choose to keep tenants in place, communication becomes your most important tool. Before any marketing begins, sit down with your tenants to explain the process. At Irelands, we arrange this initial meeting to discuss how photography will work, what the marketing schedule looks like, and what tenants can expect during viewings.
During this meeting, we walk through the specifics. We explain that photos will be taken and used in online marketing, we discuss viewings and open homes, and we encourage tenants to present the property as best they can, after all, they will be advertising their own tenancy to potential buyers. If the purchaser is an investor, good presentation could mean the buyer may wish for the tenants get to stay on.
This isn’t a conversation to rush. Taking the time to set proper expectations at the start prevents misunderstandings later. We’ve found that tenants who understand the process from day one are far more cooperative throughout the sale. They keep the property tidy for viewings, they’re flexible with scheduling, and they’re less anxious about what’s happening because they’re not left guessing.
After that initial meeting, we arrange photography and set up a viewing schedule that works for everyone. Throughout the marketing period, we keep the tenants updated. When an offer comes in, we let them know. We discuss potential outcomes and timeframes, and assure them that they will be kept in the loop on what happens next.
The type of tenancy affects what happens next:
- Fixed term tenancies are protected until the end date. The purchaser must take on the tenancy as it stands.
- Periodic tenancies give the purchaser options. They can choose to retain the tenant or request vacant possession.
Throughout the marketing period, your property manager continues to oversee the tenancy whilst your agent handles the sale process. This coordination between professionals helps ensure everyone stays informed.
Choosing to sell vacant
To sell your property vacant, you’ll need to issue proper notice. The timeframes depend on your tenancy type.
- For periodic tenancies, you can issue 90 days’ notice that you intend to end the tenancy. Marketing must commence after the tenants have vacated.
- Fixed term tenancies require more planning. You cannot issue notice to end before the fixed term date, and notice to end the tenancy at the end of the fixed term must be given within 90 days of that date.
If you’re selling to an owner-occupier and the tenancy is periodic, you can issue a 42-day notice once the sale confirms. We’d recommended allowing 49 days in the contract, to give tenants time to vacate and allow for final inspections. Your property manager and sales agent will give you guidance on the appropriate notice period for your situation.
Communication matters
Regardless of which path you choose, keeping tenants informed at every stage makes the process smoother for everyone. Tenants have rights around property access, and whilst they cannot unreasonably withhold access, they are within their rights to set reasonable limits on viewing times and frequency.
An experienced agent who understands tenanted property sales will work with both you and your property manager to navigate these conversations. They’ll help set expectations, arrange viewings that work for all parties, and keep tenants updated once the property is under offer.
This collaborative approach typically leads to better outcomes. Tenants who feel respected and informed are more likely to maintain the property well and accommodate viewings. That benefits your sale.
Making your decision
Both approaches to selling a tenanted property can work well, with proper management. Consider your priorities: do you need the ongoing rental income? How important is complete control over presentation? What’s your timeline? The answer often comes down to your specific property, your tenants, and current market conditions. An agent with experience in tenanted property sales can help you weigh these factors and choose the approach that serves your goals.
If you’re thinking about selling your investment property, the first step is a conversation with professionals who understand both the property management and sales sides of the equation. That’s where good guidance makes all the difference.
You can also read further guidance over at settled.govt.nz