What Are the Upfront Costs to Secure a Rental Property in Australia?
Securing a rental property in Australia involves several upfront costs that tenants must be prepared for. These costs can vary slightly depending on the state or territory but generally include a holding deposit, bond, and rent in advance. Understanding these expenses will help you budget effectively and avoid any surprises during the leasing process.
Rent prices in Australia are advertised as weekly, but often paid monthly. You will sometimes be allowed to chose how often you pay your rent. The rental agreement states whether the rent will be paid weekly, fortnightly, calendar monthly or at another agreed time. Once a rental agreement has started, rent is due on the agreed date by the agreed payment method.
You must be aware that one month’s rent is NOT the same as 4 weeks. Agents use the following formula to calculate monthly rent:
monthly rent = (( weekly rent / 7 ) x 365 ) / 12
Holding Deposit
Once you have been approved for a rental property, you must pay a holding deposit to show your commitment to renting the property. The holding deposit is due within 6 to 24 hours of approval and takes the property off the market while the lease is being finalised. The holding deposit will usually go towards your first month of rental payment. In the rare instance the landlord decides not to proceed with the lease, the amount is refundable. If the tenant backs out after paying the deposit, they may forfeit the amount.
Rental Bond
The rental bond is a security deposit paid at the beginning of the tenancy to cover any potential damage or unpaid rent. The bond is held in a government trust account and returned at the end of the tenancy, minus any deductions. The bond is due before the lease agreement is drawn up. Each state and territory has different rules regarding bond payments:
NSW, QLD, WA, SA, TAS, ACT, NT: Maximum of 4 weeks’ rent.
VIC: Maximum of 1 month’s rent for properties charging $900 or less per week. For higher rent, there may be no cap.
Rent in Advance
Most landlords require rent to be paid in advance before moving in. The amount differs based on the state:
NSW, QLD, WA, SA, TAS, NT: Up to 2 weeks’ rent in advance for weekly leases, or one month in advance for monthly leases.
VIC, ACT: Up to 1 month’s rent in advance.
The first rent payment ensures that tenants are always paying for their stay ahead of time and is due before the lease start date.
Understanding the upfront costs of securing a rental property in Australia ensures that tenants can plan their finances accordingly. By preparing for the deposit, bond and rent in advance, you can avoid unnecessary stress and move into your new home with ease. Always confirm the exact payment requirements with your property manager or landlord to ensure a smooth rental process.
