Selling a property can be a stressful event at any time. When the property in question is rented, all parties need to be aware of their rights and responsibilities.

Communication is the key

To minimise the strain on all involved, it’s critical to keep the lines of communication open between all parties involved in the sale process. Remember, not only are the landlord and tenant involved, real estate agents may also be helping to market the property. Everyone has their part to play.

The landlord may be selling for a number of reasons, and the real estate agent has the right to earn a living – selling houses is their job. But both these parties need to remember that the tenant has a tenancy agreement that grants them the right to live in the house. The tenant also has the right to quiet enjoyment, without interruption by the landlord or real estate agent.

The sale process will be less stressful if everyone knows what’s happening throughout the process.

Landlords must let tenants know they’re selling

If a landlord puts the property on the market, they must tell the tenant in writing. They may also choose to let the tenant know beforehand. No one likes unpleasant surprises, and a tenant may not react well to a real estate agent arriving on their doorstep telling them their home’s being sold.

A landlord may consider delivering the letter to the tenant in person so they can discuss the situation face to face. This could also be an opportunity to discuss access to the property, or to set up a time for the tenant to meet the marketing team.

Taking photographs to market the property

Photographs of the house are a great tool in securing the best possible price. Landlords must get the permission of the tenant before entering the house. The tenant can refuse to allow the landlord (or their real estate agent) to take and use photographs of their personal possessions.

Access to the property should be negotiated

Landlords, and their real estate agents, 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.

Tenants can’t unreasonably refuse access, but they can set reasonable conditions. For example, they may:

  • limit access to certain times of day and days of the week
  • refuse open homes and auctions on site
  • ask to be present during open homes.

Tenants may not agree to open homes or auctions on site. Instead, they can insist that the property be shown by appointment only. They could also ask for a temporary rent reduction for the inconvenience of allowing open homes. The landlord does not have to grant such a request.

Before including open homes or an on-site auction in the sale plan, the landlord should discuss this with the tenant. They need to get the tenant’s consent for specific dates and times for these events.

Remember that communication and negotiation are the keys to a successful sale. Once everyone’s agreed to a schedule of access, it’s best to put it in writing and make sure it’s signed by all parties – and kept to!

When the property is sold

When the property’s sold, the landlord must tell the tenant who the new owner is and when they’ll take over. The landlord should also provide the new owner with a copy of the tenancy agreement.

Once a new owner takes possession of the property, they must tell the tenant:

  • their name
  • their contact details and an address for service
  • how the tenant is to pay the rent (for example, the new bank account number).

When the property’s sold, the original landlord’s interest in the bond will pass to the new landlord. This means that the original landlord can no longer claim any bond, unless they do so before the date of settlement (or date of possession, if this is earlier). However, it is recommended that independent advice is sought to ensure any claim to the bond will not impact on the sale agreement.

If the bond is held by the Ministry of Business, Innovation & Employment, both the original and new landlords must fill in a change of landlord/agent form.

Download a change of landlord/agent form below.

Mortgagee sale

A mortgagee sale happens when a person can’t pay back money they owe to the bank. The bank sells their property to get back the money it’s owed.

Mortgagee sale explains what happens when a rented property is sold by mortgagee sale.

Ending a tenancy if the property is sold

Normally, when a rented property is sold, the tenancy continues and the new owner becomes the new landlord. But sometimes the person buying the property doesn’t want to have tenants living there.

If this is the case, the buyer will make one of the conditions of sale ‘vacant possession’. This means that the property has to be empty by the time the sale goes through and they become the new owner. The landlord who’s selling the house must give the tenant at least 42 days’ written notice to end the periodic tenancy so the house will be empty for the buyer.

Giving notice to end a tenancy has more about notice and how it can be served on the tenant.

Fixed-term tenancy

A landlord or tenant can’t give notice to end a fixed-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 then 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. The tenant doesn’t have to agree to this and may negotiate certain conditions.

Different rules apply when a rented property is to be sold by mortgagee sale.

Mortgagee sale explains what happens when a rented property is sold by mortgagee sale.

Ending a fixed-term early explains more about ending fixed terms early if both parties agree.

Periodic or fixed-term tenancy explains the difference between these two types of tenancies.