Buying A Rented House To Redevelop: The NSW Notice You Have To Get Right

REDEVELOPMENT PLANS DO NOT END A TENANCY.NSW: confirm lawful grounds, notice and evidence requirements.

You have found the right site. It has an old house on it, the house is rented, and the plan is to demolish and build. Most first-time developers treat the tenant as a scheduling detail. In New South Wales the tenancy is a legal step with its own grounds, its own notice period, its own documents, and its own consequence if you get it wrong, and it can move your demolition date by months.

The decision to make at due diligence stage is not "can I get the tenant out". It is "which ground applies, what notice period does that ground carry, what documents must accompany the notice, and does that timeline fit my programme and my funding".

The deal question: what has to happen before a tool is picked up?

Two separate approvals sit between you and a cleared site. The first is the planning and building position: what consent you need before demolition can lawfully occur. The second is the tenancy position: on what ground, and with how much notice, you can require vacant possession.

NSW Government guidance on landlord ending a tenancy sets out the grounds and the documents, and NSW Fair Trading publishes the tenancy-ending rules and forms, and states that if a tenant does not vacate by the day specified in the notice, the landlord can then apply to the NSW Civil and Administrative Tribunal for a termination order, which ends the tenancy on a specified date and requires the tenant to give vacant possession by that date. Read that as a two-step process: serving a valid notice is only the first step, and a disputed tenancy goes to the Tribunal.

The two grounds that matter for a redevelopment

NSW Government guidance sets out a demolition ground: landlords can end a tenancy if they will demolish the property, and the demolition will start within two months after the tenant moves out. It also sets out a significant renovation or repairs ground, which requires that the property must be empty for the work to be done properly and that the planned work will begin within two months after the tenant moves out.

Both grounds carry a documentary burden. For the demolition ground the landlord must give the tenant supporting documents with the notice: a written statement confirming the demolition will start within two months after the termination date, signed and dated by the landlord; a copy or partial copy of the contract for the demolition showing who is on it, what will be demolished, the address and the licence number of the person doing the work where a licence is required; and, if a development consent is required for the demolition, a copy of that consent, or a copy of the development control order where the demolition is being done because of one.

That document list is the real test of readiness. If you cannot produce a demolition contract and, where required, a development consent, you cannot serve a valid notice on this ground, and NSW Government guidance warns that if a ground requires supporting documents and none are given, or the documents do not include the required information, the termination may not be valid. Read that backwards and you get your programme: consent first, demolition contract next, notice after that.

The notice period, and why it is not the number people expect

The notice period depends on the ground, the type of agreement and the length of a fixed term. The NSW Government's published minimum notice periods table sets out 60 days for a fixed term agreement of six months or less, and 90 days for a fixed term agreement of more than six months or a periodic agreement, for both the significant renovations or repairs ground and the change of use ground. Where the property is sold and the buyer intends to rely on the actual sale ground, 30 days applies across all agreement types.

Ninety days is three months of holding costs before the tenant is even required to be out, and a tribunal application can add more. If your feasibility was built on a 30-day assumption, the error is not a rounding difference; it is a finance cost, a rate lock question and possibly a presale timing problem.

The re-letting exclusion periods most students miss

The consequences do not end when the tenant leaves. The NSW Government guidance states that a landlord who ends a tenancy on the significant renovation or repair ground cannot rent the property out for four weeks after the termination date, and a landlord who ends it on the demolition ground cannot rent the property out for six months after the termination date. There is a separate six-month exclusion tied to the proposed sale ground.

This matters if your exit plan involves a change of mind, a delayed approval or an interim rental while you wait. The exclusion period is a planning constraint on your fallback plan, not just a rule about the tenant.

The trap: buying first and reading the rules afterwards

The common mistake is to buy a tenanted site on a 42-day settlement, assume vacant possession is a phone call to a property manager, and only then discover that the ground requires documents you can only produce after you own the site, that the notice period runs to 90 days, and that the tenant may contest the notice at the tribunal.

The second version is subtler and more expensive: the developer serves a notice on the renovation ground because it looks quicker to justify, but the project is really a demolition, and the supporting documents do not match the ground used. NSW Government guidance warns that if a ground requires supporting documents and none are given, or the documents do not include the required information, the termination may not be valid, and that it is an offence to give supporting documents that are false or misleading.

The checks a capable student would run

1. Identify the ground from the project, not from convenience. Demolition project, demolition ground; renovation where the property must be empty, renovation ground.
2. Read the lease file before you exchange. Type of agreement, the fixed term and its end date, and any periodic rollover.
3. Work out the notice period on the published table and put that date in the programme as a hard constraint.
4. List the supporting documents you must be able to produce with the notice, and confirm which ones require an approval you do not yet have.
5. Price the holding cost of the full notice period, not the shortest one.
6. Check the re-letting exclusion period against your fallback plan.
7. Plan for the tribunal step as a real possibility, with a date and a cost.

The Think Property Club lesson

On a small development, the difference between a good outcome and a painful one is rarely the build. It is the sequence of approvals, notices and dates that have to line up before the build can start. A tenanted site is a good example: the tenancy is not an obstacle to the deal, it is a step in the programme that has a fixed duration and a documentary requirement, and treating it that way is what a deal-maker does. You are not expected to interpret the Act yourself. You are expected to recognise that the question exists, put it to a lawyer early, and hold a date in your programme for the answer.

Your next actions

• Ask your conveyancer to review the tenancy agreement and confirm the ground, notice period and fixed-term position before exchange.
• Ask a town planner or certifier what approval you need before demolition, and how long it realistically takes.
• Draft the supporting document list into your programme so you can see what has to exist before a notice can be served.
• Add 90 days plus a tribunal contingency to your holding cost model, not 30.
• Confirm with your lender how it treats a site that remains tenanted at settlement and when it expects vacant possession.

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Photo: Sardaka, CC BY-SA 4.0, via Wikimedia Commons.