Buying a house with tenants in WA? Here’s what happens next...

In a tight rental market like WA’s, it’s not uncommon for properties to be sold with tenants still living in them. For some buyers, especially investors, this can be a huge advantage. For others who plan to move in, it can be a little more complicated, but don’t despair - it’s certainly still possible to purchase.  If you’ve found a home you love but it’s currently tenanted, there are some things you need to be aware of before making your offer, including how the tenancy affects your contract as well as what happens at settlement.

Buying a tenanted property in WA

If you're buying a house with tenants in WA, the tenancy rules & regulations state that you must purchase it subject to the terms of the existing lease. That means whatever lease agreement the seller has with the tenant, you agree to abide by it, and continue it under your ownership. In short? Just because the property is sold, doesn’t mean that the landlord’s or the tenant’s rights and obligations change.

There are two different types of residential leases in WA:

Fixed-term tenancy

These leases have an end date, and remain in place until then. You, as the new owner, take over as the lessor (landlord) and must honour the terms of the existing lease.

Periodic tenancy (month-to-month)

These leases give a little more flexibility, but you’ll still need to provide the appropriate notice if you want the tenant to vacate at or after settlement.

In both cases, the tenancy should be clearly noted as a condition in the Offer and Acceptance (O&A). If you’re unsure how to word this or what to include, your conveyancer can guide you before your offer is signed.

What to check before making your offer

Before you submit your offer, it’s worth clarifying:

• Is there a current lease in place, and when does it expire?

• How much rent is being paid, and how often?

• Is the tenant up to date with their rent payments?

• Who manages the property (an agency or the owner directly)?

• Has the tenant been notified of the sale?

Having these details upfront helps you understand whether the property suits your needs, especially if you’re planning to move in yourself at some stage in the short-term future.

If you’re buying as an owner-occupier, you need to understand that if there is a tenant in place, you won’t be entitled to vacant possession.  If this is a requirement of your offer, it should be included as a specific condition for the seller to give the tenant the requisite notice to vacate before settlement.  Remembering though, if the property is subject to a fixed-term tenancy, vacant possession may actually not be possible.

Inspections and access during the sale

While the property is tenanted, the seller and their agent are required to give the tenant appropriate notice before inspections or valuations.  This can mean that your access as a buyer is slightly more limited, for example, you may only be able to inspect at certain times agreed with the tenant.

Your conveyancer doesn’t get directly involved in these arrangements, but it’s good to be aware that access can sometimes be slower than with a vacant property.

What happens if you’re buying as an investor

For investors, buying a home with a tenant already in place can actually make things easier. You’ll have rental income from day one, and you don’t need to worry about advertising for new tenants after settlement.

When you take ownership:

• The lease continues unchanged.

• You become the new lessor under that lease.

• The property manager will update records to reflect you as the owner.

Your conveyancer will handle some of the details in the background to ensure a smooth transition.  Read on for more information.

The conveyancer’s role in a tenanted property settlement

When a property has a tenant in place, there are a few extra steps your conveyancer will take to ensure everything transfers correctly.

1. Bond transfer

The rental bond, held by the Bond Administrator, needs to be formally transferred into your name as the new owner (lessor). Your conveyancer will liaise with both the outgoing and incoming property managers to arrange this.

2. Rent apportionment

Rent is adjusted between the buyer and seller at settlement. If, for example, rent is paid monthly and settlement occurs halfway through the month, your conveyancer will ensure that this is adjusted so each party receives what they’re entitled to.  Depending on the property managers involved, this may be handled by them, or by your conveyancer at settlement.  

3. Documentation handover

Before settlement, you should receive copies of:

• The current lease agreement

• The Property Condition Report (PCR)

• Any variations or inspection reports

• Details of the managing agent

These are important records that confirm the condition of the property and your responsibilities as the new lessor.

Common scenarios when buying a house with tenants in WA

To help illustrate how the process works, here are two common examples:

Scenario 1: You’re buying to live in the home

You’ve found your dream home in Joondalup, but it’s tenanted under a lease until February next year. You plan to move in once the lease ends.  Prior to signing the offer, your conveyancer can review it for you to ensure your offer reflects that the purchase is subject to the existing lease, and that you’ll take possession after the current lease expires.

If you need the property vacant sooner, your conveyancer can advise on timing and help word your offer to reflect vacant possession at settlement.

Scenario 2: You’re buying as an investor

You’re purchasing a tenanted property in Hillarys with a fixed lease that runs for another six months. The rent is $700 per week, and the tenant wants to stay. Your conveyancer will coordinate with both property managers to transfer the bond, adjust rent, and make sure all lease documents are handed over before settlement.  You’ll start receiving rent from the day of settlement and continue the existing lease terms.

Why clear communication matters

When a tenancy is involved, there are more moving parts, and more people. Good communication between your conveyancer, real estate agent, and property manager helps avoid confusion and delays.

It ensures that:

• The tenant receives proper notice (if applicable)

• The bond is transferred correctly

• Rent adjustments are calculated accurately

• You get all the documentation you need before you take ownership

Clarify your expectations in the Offer and Acceptance form before you sign.

• A tenanted property must be sold subject to the existing lease.

• Fixed-term leases must be honoured until they expire.

• For periodic leases, notice periods apply if the tenant is required to vacate.  

• Your conveyancer will ensure that the bond transfer, rent adjustment, and document handover are arranged with the property managers as part of the settlement process.

Buying a property with a tenant in place can be a smart move, especially if you’re investing. Just make sure you understand your obligations under the contract and the lease before you commit.

FAQ: buying a tenanted property in WA

Can I move in straight after settlement?

Only if the tenant has vacated and your contract specifies “vacant possession.” If there’s a fixed-term lease, you must honour it until it expires.

What happens to the bond?

Your conveyancer will arrange for the bond to be transferred into your name as the new lessor, with help from the property managers.

Do I start collecting rent straight away?

Yes. Rent is adjusted at settlement so you start receiving payments from the day you become the owner.

What if the tenant stops paying rent before settlement?

If rent falls behind before settlement, it’s the seller’s responsibility to address it (the buyer doesn’t back-pay the seller for any arrears out of their own pocket). Once settlement takes place, you become the new lessor under the lease, and any ongoing rent payments (or arrears that accrue after settlement) become your responsibility to manage with the tenant or property manager.

Can I inspect the property before settlement?

Yes, but inspections must be arranged in coordination with the real estate agent and the property manager to ensure proper notice is given to the tenant.

Buying a tenanted property in WA?

North Shore Conveyancing will help you navigate the process with confidence.  We’ll take care of everything from reviewing your offer to ensuring the bond, rent, and lease documents all transfer smoothly.

Contact Katelyn today to chat about your upcoming purchase and get expert guidance from a licensed settlement agent who’s seen it all.