Published on December 11, 2018 6:10 am, by Jen Bakker
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:
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 trad-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.
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 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:
Other ways to spend less on rent
In the following states bond is a maximum of 4 times your weekly rental amount
In these states the amount of bond is negotiable when you reach a certain level of 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 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.
Jen is an experienced banking professional who loves wine, coffee, finding a bargain and of course her three beautiful children. Since Jen's first budget led her to buy a home at 20, Jen has passionately helped others to make better decisions with their money.