What Does “Subject to Existing Tenancy” Mean in Your Contract?
Buying a tenanted property in NSW? Here’s what “subject to existing tenancy” means for the lease, the rent, and when you can move in.
If you’re buying a property that’s currently rented, your contract will likely include a clause noting the sale is subject to existing tenancy. Here’s exactly what that means for the lease, the rent, and your own moving plans.
At a glance
- The property is currently rented, and the tenant’s lease continues after settlement.
- You inherit the existing lease terms and receive rent for the remainder of the tenant’s term.
- You cannot move in or ask the tenant to leave early just because ownership has changed.
- Since 19 May 2025, ending a tenancy in NSW requires a valid reason, so the lease running out does not automatically give you vacant possession.
What does “subject to existing tenancy” mean in my contract?
It means the property is currently rented, and the tenant’s lease continues after settlement rather than ending because ownership changes. In practice, that means the tenant can stay in the property until their fixed-term lease ends, their existing lease terms carry over to you as the new landlord, and you’ll receive any rent due for the remainder of the tenant’s term.
Can I move in myself once I settle?
Not until the existing lease ends. You can’t move in yourself or ask the tenant to leave early just because you now own the property. If you’re planning to move in on settlement day, this is the clause to check for before you commit to a purchase, not after.
What happens once the lease expires?
This is the part that caught a lot of buyers out when the law changed on 19 May 2025. A lease reaching its end date no longer means the tenant has to leave. Landlords in NSW can no longer end a tenancy without a reason, so you need one of the grounds set out in the Residential Tenancies Act 2010 before you can give notice.
The grounds include you or a family member moving in, significant renovations or repairs that require the property to be empty, a change of use, or a sale that requires vacant possession. Notice periods are generally 90 days for a periodic agreement or a fixed term of more than six months, and 60 days for a fixed term of six months or less.
What if the tenant is on a periodic agreement?
If the fixed term has already ended and the tenant is renting on a continuing (periodic) agreement, there is no end date to wait for. The same rules apply: you need a valid ground and, in most cases, 90 days notice.
What if I want the property empty on settlement day?
Negotiate it into the contract before you sign. Vacant possession as a contract term puts the obligation on the seller to deliver the property empty at settlement, which is far cleaner than buying subject to a tenancy and trying to end it yourself afterwards. Tell us early if this matters to you, because it needs to be sorted before exchange, not after.
In plain English
Buying a tenanted property is a bit like buying a car with a passenger already booked in for the drive. You now own the car and you collect the fare, but the passenger’s ticket is still valid and you can’t pull over and ask them to get out just because the car changed hands.
Related reading
Buying a tenanted property?
We’ll check the tenancy clause and lease details before you exchange, so there are no surprises.
