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We set you straight on the DOs and DON’Ts

Before you take on a mortgage, renting can be one of the best phases of your life – or one of the worst, if you have a bad landlord or flatmates. So, before you get into renting, start by asking some hard questions – and the sooner you ask, the better.

If you’re in the market for a new housemate, ask prospective tenants about their finances – roughly how much they earn and what debts they’ve incurred. Once you’ve made a decision, immediately reach an understanding about splitting bills, and make sure you never have all the bills in your name – you’re sharing a house after all, so you should also share the responsibility of utility accounts and lease agreements.

We’ve based our information on the laws within NSW, so be sure to find out how things happen in your own state.

Tip 1: Don’t overextend yourself

Never sign a lease for a property you really can’t afford. Leave yourself enough financial space to save some cash each month for investing, eventually purchasing a place of your own, or even just for a rainy day. Equally though, don’t always think the cheapest rental property you find will make the best home. It can be worthwhile paying more to live closer to work or to where you spend most of your time. And factor in other ways you’ll save – if an apartment has a gym, tally up the savings on your private gym membership if you have one.

The following numbers will give you an idea of how much rent you’ll fork out in a year. (See Tip 2 on how to calculate this number.)

$150 a week = $7821 a year
$200 a week = $10,429 a year
$250 a week = $13.036 a year
$300 a week = $15,643 a year

Tip 2: Weigh up all expenses

A common trap for renters is to not consider small expenses or ones that don’t affect you upfront. For instance, electricity adds up, so best to avoid places with energy drainers such as electric heating. Also have a good look at the lighting – newly renovated properties may have numerous down lights installed, which can cost you a lot more than normal lights when replacing bulbs.

Another expense that’s often overlooked is insurance. Assess the level of security, particularly if you’re living in inner city areas. Places without bars or double locks are an easy target and will push up premiums or leave you out of pocket if you need to replace stolen items. Insurance is often costly or hard to get if there are a few people renting together, so ring around for quotes.

Most real estate agents will ask you to pay rent monthly, but this adds up to more than just your weekly rate multiplied by four, as there are more than 28 days in a month. To work out the amount, follow this simple calculation.

Step 1 – Divide your weekly rental amount by 7 (this gives you a daily cost)

Step 2 – Multiply the daily cost by 365 (for the annual cost)

Step 3 – Divide by 12 (for the monthly cost)

For example, a $250-a-week rental property will work out to be $1086.31 a month.

Tip 3: Get all agreements in writing

It’s not uncommon when you’re inspecting a property for landlords to promise things such as repairs, cleaning, new locks, power points or flyscreens. Always get this on paper, as landlords have been known to renege on verbal commitments after you’ve signed on the dotted line and moved in.

Tip 4: Securing the property you want

Michael Connolly, general manager of McGrath Property Management, helps renters find accommodation in Sydney’s eastern suburbs. He said a common mistake is for people not to move quickly enough to lock in the property they want once they find it. “The application and deposit should be placed on the property on the same day,” Michael says. But while the general feel of a place is often the deciding factor, he also advises renters not to overlook other features before signing on the dotted line, such as room size and Foxtel installation.

Tip 5: When signing the lease

Most tenants sign a six-month, one-year or two-year lease, but you can negotiate the length of the agreement. It should cover everything from how much rent you’ll pay, to the amount of bond, start and end date of tenancy term, the landlord’s name, extra costs to come out of your pocket such as excess water usage, and whether children or pets are allowed. Remember, it’s the most important document you’ll sign when renting, so read the find print.

Tip 6: Who has your bond?

When taking out a lease you’ll be required to pay a bond – usually up to four weeks rent for an unfurnished place or up to six weeks for furnished premises. The money is then sent to an independent bond authority to hold until you move out. Also, if you’re paying your bond contribution to a flatmate, make sure you get a receipt and proof that your share of the bond has been correctly lodged (this can save future dramas).

So, what guarantee do you have of getting your bond back? At the end of the lease if there’s no claim from the landlord for outstanding money, the bond is returned in full to the tenant. If there’s a dispute the matter is referred to a tribunal. The landlord will have to state their case to claim any money. This is why it’s useful to keep a log of any conversations or money spent on a property so that you’re armed if you end up in a tribunal.

Tip7: Always get receipts for rent

Rent is usually paid into a bank account nominated by the landlord or real estate agent, but sometimes there are looser arrangements, so where tenants hand money to a landlord in person. If you find yourself in this situation, demand a receipt in case there’s any dispute at the end of your lease – that way you can prove you’ve paid.

Tip 8: File that condition report

On moving in you’ll be given a condition report to complete. It’s tempting to skip this and leave it lying in the bottom drawer, but it’s the only evidence you’ll have of the state of the property before you occupied it.

It’s incredibly common for there to be problems when you depart – the landlord might just hold a different view about the property’s condition when you moved in. An extremely helpful thing to do is to take photos of the property before you’ve even moved anything in. It might seem like a lot of work at the time, but these photos may save you time and a lot of money later on if the landlord decides to dispute anything.

Tip 9: Keep in touch with your landlord

If something breaks, inform the landlord in writing and obtain approval for repairs or maintenance – otherwise you could be up for the expense if unauthorised work is conducted. The same applied if your rented home is infested with any kind of bug or vermin. Make sure to keep receipts for all work done on the property.

Tip 10: Rent rises happen, eventually

Under a fixed-term lease your landlord can’t increase the rent, but if you’re on a month-to-month agreement when your lease runs out, the landlord can hike up the rent after providing notice for 60 days, plus four days to allow the letter to arrive in the post.

By Karen Lateo

For more great ideas and practical solutions for your home see http://www.reallivingmag.com.au/