Buying a tenanted property: what you need to know

Not every property for sale is empty. Many are sold with a tenant already in place, paying rent right up to and past settlement, and the rules around that tenancy are worth understanding before you sign. This is one stage in our buying process guide. Victoria's Residential Tenancies Act 1997 governs the landlord-tenant relationship and keeps applying after you become the owner: the sale doesn't give you a right to end the tenancy or change its terms just because you're the new landlord.

The tenancy transfers to you

At settlement you step into the previous landlord's shoes. The lease, the rent, the end date, and all the tenant's rights carry over unchanged. You can't renegotiate the rent or ask the tenant to leave simply because the property changed hands; from the tenant's side, nothing happened. That's worth being clear on before you make an offer, because it shapes what you can do afterwards.

The key distinction is the tenancy type, which should be disclosed in the Section 32:

• Fixed-term: a lease with a set end date. Buy during it and you must honour it, so you can't move in early or swap tenants; you wait for it to expire.
• Periodic: no fixed end date, running month to month. As the new owner you can give notice to end it, but only under the Act's strict notice periods.

Vacant possession and notice

If you want the property empty to move in or resell, you have to end the tenancy first, and the required notice depends on the reason. An owner-occupier wanting to move in must give the Act's notice, which is substantial and applies even after you've settled. If the contract states vacant possession, the vendor must deliver the property empty by settlement (their problem, not yours); if it doesn't, you're buying with the tenancy in place. Always check the contract and Section 32 for which applies.

For a tenanted property the Section 32 should include the current lease, the bond amount (lodged with the Residential Tenancies Bond Authority), the rent and frequency, the tenancy type and end date, and any notices already issued. Review these with your conveyancer: note the end date on a fixed lease, or on a periodic one, what notice you'd need and when you could realistically end it.

The financial and practical side

There's an upside: rent continues through settlement and is apportioned at settlement, so you receive a share to the next due date. For an investor that immediate income with no vacancy is core to the deal; for an owner-occupier waiting to move in, it's an offset while the tenancy runs down.

The practical trade-off is access. Tenants have quiet enjoyment, so you can't wander through at will. You get the standard pre-settlement inspection, usually once, not repeated walk-throughs to plan renovations, and significant work waits until the tenant vacates, potentially months away.

You also inherit the landlord's obligations from settlement, including any maintenance the previous owner was ignoring, and possibly existing disputes. Your conveyancer can advise on required disclosures, but do your own due diligence too: ask the agent how long the tenant has been there, whether rent is current or in arrears, whether there are active disputes or notices, and how well the property's been maintained. Ask to see the managing agent's inspection reports if they exist. Note too that the property management agreement doesn't automatically transfer, so if you're continuing to rent, arrange a smooth handover of rent collection and tenant contact before settlement.

For investors

A sitting tenant can be a genuine advantage: immediate income, no advertising or vacancy, and a smooth transition if the tenant is good. The risks are the limited inspection and inheriting whatever the tenancy is, so if the rent is below market or the tenant is difficult, your short-term options are limited. Check the rent against current market rates; if it hasn't risen in years you may be able to increase it once you own, within the Act's limits on how much and how often.

Buying tenanted isn't complicated, but go in clear-eyed: read the Section 32, know whether you're getting vacant possession or a tenancy, understand the notice periods if you need it empty, and factor in the tenant's rights. Your conveyancer can explain the lease and your obligations as landlord from day one.

Sources

• Residential Tenancies Act 1997 (Vic): the law governing the tenancy that transfers to you at settlement, including notice periods and bond rules.
• Consumer Affairs Victoria: Renting: the regulator's guidance on landlord and tenant rights and obligations, and the Residential Tenancies Bond Authority.

Sources verified 25 July 2026. Notice periods and rent-increase rules are specific and change; confirm your obligations with Consumer Affairs Victoria or your conveyancer.