Buying a tenanted property

Buying a tenanted property means purchasing a rental with an existing tenancy in place, which continues after settlement and binds the new owner exactly as it bound the vendor.

What happens to the tenancy on sale

A fixed-term tenancy survives the sale — the new owner steps into the vendor's shoes as landlord for the remainder of the term, on the same conditions. A periodic tenancy also continues; there is no automatic right to end it just because the property has changed hands. Where the buyer genuinely needs vacant possession, the sale and purchase agreement needs to make that a condition, and ending a periodic tenancy for owner move-in or sale generally requires the correct notice period under the Residential Tenancies Act.

The 42-day pathway

Where an agreement of sale is unconditional and requires vacant possession, a landlord can generally give a tenant 42 days' notice on that basis — but this only works cleanly when the sale terms actually require vacant possession and the notice is given correctly. Get the sequencing right: agreeing to buy with vacant possession assumed, without checking whether that's achievable in the tenancy's current terms, is a common and expensive mistake.

Bond, rent and apportionment at settlement

The bond lodged with Tenancy Services transfers to the new landlord — this needs to be actioned through Tenancy Services, not assumed to happen automatically. Rent paid in advance and other outgoings are apportioned between vendor and purchaser as at settlement date, the same way rates are.

What to request during due diligence

The current tenancy agreement, a rent payment record, confirmation of bond lodgement (and the lodgement number), a Healthy Homes compliance statement, and any recent inspection reports or maintenance correspondence. This tells you what you're actually inheriting — a tenant paying under market with a poor payment history is a different proposition to the same weekly rent with a spotless record.

Common misunderstanding

Investors buy tenanted properties constantly and still get this wrong — assuming a sale automatically ends the tenancy, or that a new owner can simply give notice on settlement day. The tenancy is a legal relationship with the property, not the previous owner, and it doesn't reset because the title changed hands.

Related terms

Sources

• Tenancy Services — buying or selling a rental property; Residential Tenancies Act 1986

Last reviewed: 1 August 2026 · General information only, not legal advice.

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