Buying a House With a Renter in It? Here’s What You Must Know First

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In Victoria, buying a property with an existing tenant can be a smart investment—or a major headache. Whether you’re an investor planning to keep the tenant or a buyer who wants to move in, you must understand your rights and obligations under the Residential Tenancies Act 1997 (Vic).

As explained by David Dawn, Licensed Conveyancer at Victorian Property Settlements, the presence of a renter changes the dynamics of the sale, the settlement, and your future use of the property.

What Does It Mean When a Property Is 'Tenanted'?

If the vendor has leased the property to a tenant under a rental agreement, and that agreement extends beyond settlement, the buyer inherits the tenancy. This means:

  • The tenant remains in possession

  • The new owner becomes the landlord

  • The existing rental agreement continues to apply

  • Your plans may be limited by the tenancy

Can I Move In?

Only after the rental agreement ends.

If the tenant is on a fixed-term lease, you must wait until the lease expires before you can issue a notice to vacate for your own use.

If the tenant is on a month-to-month lease, you must give at least 60 days’ notice (plus mailing time), and only after you become the legal owner at settlement. You must also state a valid reason under the Act—such as moving in yourself.

Warning: You cannot issue notice before settlement, even if you intend to live there.

Will I Receive the Rent?

Yes. The Statement of Adjustments at settlement will apportion rent received by the vendor up to the day of settlement, with any balance passed to you.

Ongoing rent is then paid to you or your property manager.

Make sure the contract includes a special condition confirming:

  • Tenant’s name

  • Rental amount and payment frequency

  • Bond held and agent managing the lease

  • Copy of the lease provided by the vendor

Are There Risks?

Yes—and they are different depending on your plans.

If you’re buying to live in:

  • The tenant may not leave when requested

  • You may have to apply to VCAT to terminate the tenancy

  • You may face delayed possession, which affects your move-in plans

If you’re buying as an investor:

  • The tenant may stop paying rent just before or after settlement

  • The condition of the property may not be disclosed clearly

  • You may inherit existing disputes or poor management

You also take on responsibility for compliance items such as:

  • Gas and electrical safety checks

  • Smoke alarm maintenance

  • Disclosures under the Residential Tenancies Regulations 2021

What Should Be Included in the Contract?

When acting for purchasers, we recommend the following are always inserted or confirmed:

✅ That the property is sold subject to the tenancy agreement
✅ That the purchaser acknowledges the lease and tenant’s right to occupy
✅ That rent and bond details are disclosed
✅ That the managing agent will transfer documents and keys
✅ That any existing breach notices or disputes are disclosed

Final Inspection Rights

Buyers have the right to inspect the property within 7 days before settlement. This right still applies even if the tenant remains in possession, but you may need to coordinate access with the managing agent or tenant directly.

Remember: You are buying subject to the tenancy, so you are not entitled to demand that the tenant vacate or clean the property to owner-occupier standards unless otherwise agreed.

Conclusion

Buying a tenanted property in Victoria can be a valuable opportunity—but it requires careful legal review and practical planning.

At Victorian Property Settlements, we ensure all tenancy terms are fully disclosed, settlement risks are managed, and your future plans are protected.

Do not sign a contract involving a renter without a detailed review by a licensed conveyancer.