For a lot of people Rent is a significant part of their overall spending and take home pay. So keeping your rent payments under control can have a big impact on your overall spending. Here are our tips on managing your Rent spend:
- Figure out what you can afford to pay first – this will usually be a percentage of your income
- Use what you can afford to pay and other things that are important to you to start looking for homes to rent
- Figure out what you need to pay based on available properties. If it’s more than what you can afford you’ll need to adjust your search parameters
- Factor in other costs like transport when you consider different locations
- Negotiate with the landlord or agent to get the best deal you can on rent
- Make sure the Bond you are asked to pay is in line with legal requirements
- Maximise your chances of getting all your Bond back at the end of the rental term
What can you afford?
As a rough rule of thumb you should spend a maximum of 30% of your income on rent. Any higher amount than this is considered to be a sign of “rental stress”. It’s just a guide, and your circumstances might require you pay more than this, or you might decide to pay more than this. But paying more than this could leave you short of money for other things like food, clothing and other essentials.
Searching for properties
One you know how much you can afford, give some thought to other important factors – things like location, transport options, access to schools or education facilities. Searching for rental properties is pretty easy these days using well known websites like Domain and Realestate.com.au
Figuring out what you need to pay
Once you start looking at available properties you’ll get an idea of how much you need to spend for what you are looking for. If it’s less than what you can afford that’s a good thing. You can pocket the savings and use them for other important things. If your search for properties shows you’ll probably have to may more than you can afford you’ll have to adjust your search options. Think carefully about what’s important and think creatively about how you might be able to get all of them, or at least most of them, in areas that might be cheaper.
You might also want to use the Rent Tracker Postcode Tool. It will give you details about the median rent in suburbs you are interested in. If you’re interested in very recent results you can choose the last 30 days, or you can choose longer. You search by the number of bedrooms and the dwelling type as well as the postcode. It will compare the figures it gives you with the same period last year, so you can know whether rents have been trending up, down or staying steady.
When you think about how much you can afford to pay and how much you need to pay, give some thought to other costs that will be related to where you choose to live. Transport costs are an obvious one. The facilities available with your rental property will be another. The trade-off will probably be something like – living closer to where you work might cost you more in rent but will come with lower transport costs. You’ll pay more for rent, but less for transport. Is it cheaper overall or more expensive? Another trade-off might be a rental unit that has a gym facility. The rent might be higher but you might save on gym fees. Is it cheaper overall or more expensive? Factoring in costs and savings like these might make the difference between whether you can afford something or not.
Negotiating with the landlord or agent
There are really only two occasions when you can negotiate your rent – when you first enter a rental agreement and when your agreement is up for renewal. The key to negotiating your rent is doing your research and being well prepared.
- How long the property has been on the market – the longer it’s been on the market the better your chances of negotiating the rent
- The rent being paid and being asked for similar properties in the area
- What’s happening in the rental market in the area
Most landlords will want a good, stable and long term tenant. This will maximise the investment return they get on their property. So think about how you make yourself look like an attractive tenant. This will depend on things like:
- The length of the lease you are willing to enter
- Your family status
- Whether you have pets
- Your occupation and the stability and certainty of your income
The things you need to consider and your negotiation tactics are similar when it comes time to renew your rental agreement. Hopefully by that time you’ve proven you are are good tenant and the landlord or agent will be keen to keep you. You should also:
- Look around at other properties on the market
- Check any proposed rent increase to make sure it’s fair and reasonable
- Know the cost of moving and don’t be afraid to share it with the property manager if you’re going to be better off
- Remember the property would probably be vacant for 1 to 4 weeks if you moved so the landlord may forgo a small increase so they don’t have a vacancy period
Other ways to spend less on rent
There are some other obvious ways to save on rent, but they may require significant compromises and they may not suit your circumstances. Think about options like:
- Moving further away from the city or popular places to work or study
- Downsizing and moving into something smaller
- Sharing the rent with someone else – either get someone to move in with you or move into a share house
- Moving into something a bit older or less well maintained
- Getting back some of your rent using short term rental services like Airbnb – but make sure you are allowed to do this under your rental agreement
In the following states, bond is a maximum of 4 times your weekly rental amount:
- New South Wales
- Northern Territory
- Australian Capital Territory
In these states the amount of bond is negotiable when you reach a certain level of rent:
- Victoria – For rent up to $350 a week you bond will be a maximum of 4 weeks rent. If the rent is more than $350 a week the the bond is negotiable
- Queensland – For rent up to $700 a week your bond will be a maximum of 4 weeks rent. If the rent is more than $700 a week the the bond is negotiable
- Western Australia – For rent up to $1200 a week your bond will be a maximum of 4 weeks rent. If the rent is more than $1200 a week the the bond is negotiable. A pet bond of up $260 can be requested if the weekly rent is more than $1,200 and the pet is not an assistance dog
- South Australia – For rent up to $250 a week your bond will be a maximum of 4 weeks rent. If the rent is over $250 the bond is a maximum of 6 weeks rent
Making sure you get your bond back
Bond is a security deposit paid by tenants at the start of a rental agreement for cases where they don’t follow the terms of their rental agreement. Most landlords charge a bond, though it isn’t compulsory. Tenants have their bond refunded at the end of the rental agreement unless there is a reason for the landlord to keep it, or keep some of it.
Landlords and agents will generally claim money from a rental bond for things like repairs to damage caused by the tenant, cleaning and repairing or replacing locks if they have been altered by the tenant.
To minimise a landlord or agents claim against your bond make sure you don’t have any of these types of issues outstanding at the end of your agreement.
When your rental agreement ends, if you and your landlord or agent agree on the amount of bond to be refunded, its a simple process. If there is a disagreement you may have to have your dispute resolved through the dispute resolution process in your state.