The cost of purchasing a home has been increasing, and the size of deposits needed, make buying property unrealistic for many. This kind of trend has been gaining traction all over the developed world, but it is especially evident in the land Down Under, with Sydney and Melbourne consistently appearing on top ten lists of the world’s most expensive cities. Due to this unaffordability factor, we have seen a dramatic increase in the rental property market. Renting a home can be a good choice for those who prefer to invest in other areas or those who move locations for work regularly. We have compiled a brief guide to help tenants understand their rights and responsibilities when renting.
As a number of Australians are moving away from purchasing a home due to rising property prices or lifestyle choices, the rental market is booming, and rates can be high in urban areas. According to Lendi, who published a recent survey, 19.2% will always rent their home. As so many people are happy to keep paying rent rather than buy, the prices will remain high. There is no legislation in place to fix rental rates; the landlord and the tenant can agree on a price before signing a rental agreement. Increases in rent are inevitable as property prices continue to rise, but they cannot be increased in the first year of any agreement and can only be increased every six months or once a year depending on the state you live.
Fixed v Periodic Term Tenancies
The two tenancy types available in Australia are fixed term when the tenancy is agreed for a specific time frame and periodic term, which is either week to week or month to month. When a fixed term tenancy agreement has expired, the tenant will automatically enter a periodic tenancy in all states (except NSW), when the new agreement will be a similar fixed term with the same rules and regulations. The main difference between fixed and periodic contracts is that a periodic term tenancy will continue until either the landlord or the tenant gives written notice. A fixed term tenancy has a date that the agreement will finish. One downside to the fixed term is that you as a tenant will be liable to cover all rent until the lease ends or unless you have a clause in the contract for a notice period.
Deposits and Rental Bonds
The amount of deposit you will be required to pay will depend on the rental value of the property, and this can vary from state to state. The deposit will be tied to the cost of rent on the property, and it can be as low as two weeks rent in some states if the weekly rent is lower than A$300, and up to one month for higher priced rentals. Rental bonds are a little more complicated as these can vary depending on rental price, furnishings and rental agreement. A typical bond carries a one-month rental value, but this varies greatly depending on the state you live. For furnished dwellings in NSW, a bond can be six weeks, or if the rent exceeds A$500 per month, this can increase to the landlord’s choice. In most States a rental bond of one-month is standard, and these can be checked using your State Rental Bonds office.
Maintenance and Up Keep
As a tenant, you will be responsible for cleaning the inside of the property and taking care of some common issues like replacing light bulbs. The landlord is obligated to ensure that the property is habitable and must make immediate repairs when needed to ensure the property is not:
• exposing a person to the risk of injury
• exposing the property to damage; or
• causing the tenant undue hardship, or inconvenience.
If you notice a water leak or other defect which, if left untreated, will cause damage to the property you may be liable, so informing the landlord of any issues immediately is advised. Should you be unable to contact the landlord when an emergency defect needs fixing, you can call on experienced repair people and, the landlord will need to cover any expenses you incur. We recommend getting the landlords, and your responsibilities, in writing so that both parties know the procedure when an emergency repair is required. Outside areas need to be maintained by the tenant, but the landlord must provide the equipment or tools required, yard brush, pruning shears and watering hoses when needed. Major tree cutting is the responsibility of the owner and should be arranged yearly to make sure trees do not interfere with electric cables.
Most disputes between landlords are tenants are due to poorly written or vaguely worded contracts that offer no precise information regarding the responsibilities of both parties. Most disputes only arise in the event of an emergency or unexpected event. Take a little time to read through an agreement and if you are not happy with the wording, ask for clarification, so you know what you need to do, regardless of the problem.