Selling a property can be a stressful event at any time. When the property is rented, everyone should understand their rights and responsibilities.

Landlords sell their properties for many reasons. But remember that the tenant has a tenancy agreement that gives them the right to live in the house. Selling a rented property is a lot less stressful when everyone knows what's happening throughout the sale process.

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

What happens to a tenancy when a property is sold?

There are three different scenarios that could apply when a landlord sells a property that is tenanted.

Scenario 1: Selling a tenanted property where the buyer will take over as the new landlord

The landlord sells the property to a buyer who is happy to continue renting it out to the existing tenants, and will take over the tenancy as the new landlord.

The landlord details on the tenancy agreement need to be updated, as well as the details on the bond record held by Tenancy Services (if there is a bond). Contact details should be exchanged between the new landlord and tenants. The conditions of the tenancy are not affected in this scenario.

Scenario 2: Selling a tenanted property where the buyer wants the property to be vacant

The landlord sells the property to a buyer who wants the property to be vacant when the sale settles. This must be a requirement of their unconditional agreement for the sale of the property.

If the current tenants are on a periodic tenancy, the landlord must give at least 90 days’ written notice to end the periodic tenancy so that the property will be vacant for the buyer on settlement. This may affect the settlement date for the property sale.

If the current tenants are on a fixed-term tenancy that was granted on or after 11 February 2021, the landlord can end the tenancy on expiry (or later) with 90 days’ written notice if the sale of the property has a requirement that the landlord gives the purchaser vacant possession.

If the fixed-term tenancy was granted before 11 February 2021, the landlord can end the tenancy on expiry in accordance with the rules that were in place before the February 2021 law changes.

A fixed-term tenancy cannot be ended early by the landlord or tenant, unless the tenant agrees in writing to end it. If the tenant doesn’t agree, the property must be sold with the tenant and tenancy in place (see Scenario 1 and ‘Ending a fixed term early’).

Section 51(2) of the Residential Tenancies Act 1986(external link) — New Zealand Legislation website

Scenario 3: Selling a property with vacant possession already decided

If the current tenants are on a periodic tenancy, and the landlord wants to sell the property with ‘vacant possession’ (meaning a property with no tenants) the landlord must give at least 90 days’ written notice to end the periodic tenancy.

If the current tenants are on a fixed-term tenancy that was granted on or after 11 February 2021, the landlord can end the tenancy on expiry (or later) with 90 days’ written notice if they will put the property on the market for sale.

If the fixed-term tenancy was granted before 11 February 2021, the landlord can end the tenancy on expiry in accordance with the rules that were in place before the February 2021 law changes.

If a landlord terminates a tenancy under this new termination reason, they cannot put the property on the market for sale until the tenancy has ended. They may, however, make preparations (such as a real estate agent carrying out an appraisal or taking photos) if the tenant gives permission. Once the tenancy has ended, the landlord must put the property on the market within 90 days.

A fixed-term tenancy cannot be ended early by the landlord or tenant, unless the tenant agrees in writing to end it. If the tenant doesn’t agree, the property must be sold with the tenant and tenancy in place (see Scenario 1 and ‘Ending a fixed term early’).

Section 51(2) of the Residential Tenancies Act 1986(external link) — New Zealand Legislation website

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 could also choose to let the tenant know before they put it on the market. A tenant may not react well to a real estate agent arriving unexpectedly on their doorstep.

Landlords should consider delivering the letter to the tenant in person so it can be discussed face to face. This is also a good time to talk about accessing the property for any preparations that need to take place.

Notice templates can be found at 'Giving notice to end a tenancy'.

Access to the property

Landlords must get the tenant's permission before entering the house to take photos. The tenant can refuse to allow photographs of their personal possessions.

Landlords must also get the tenant's permission to show potential buyers through the house, as well as professionals like a registered valuer, real estate agent or building expert.

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

  • limit access to certain days and times of the week
  • refuse open homes and auctions at the property.

Tenants can insist that the property be shown to potential buyers by appointment only. They can also ask for a temporary rent reduction in return for permitting open homes (the landlord does not have to grant this). Tenants have the right to be present at the home at all times, including during open homes.

Communication and negotiation are important. Once everyone has agreed to a schedule of access, put it in writing and make sure it’s signed by everyone involved.

Once the sale has taken place

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 to pay the rent (e.g. the new bank account number).

The old landlord’s interest in the bond will pass to the new landlord. This means that the old landlord can no longer claim any bond, unless they do so before the date of settlement (or date of possession, if this is earlier). Landlords should seek independent advice to make sure any claim to the bond will not affect the sale agreement.

If Tenancy Services holds the bond, both the old and new landlords must send in a completed change of landlord/agent form.

Download a change of landlord/agent form below.

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