There are things you need to know before moving out of home and into your first rental property.
Let’s say you’re moving into a share house with a couple of friends. You’re at the real estate agency going through the rental agreement. She pauses to ask if you have any questions before signing.
OK, so here is the rental agreement for you to sign. Do you have any questions?
Well, a rental agreement is a legally-binding contract. It has quite a few clauses or terms and conditions, so take it home and read it through.
The main terms and conditions include that you agree to pay a particular amount of rent on a specific day each month, how long the agreement is for and that you agree to keep the property in the same condition as when you received it, except for normal wear and tear.
Anything else you want to know?
You should always understand a contract before you sign it. Better still get someone with experience to go through it with you. Remember, once you've signed a contract you can't just cancel it because you made a mistake or changed your mind.
Also, when you move in, the condition of the property will be detailed on the condition report. You must read this and make any changes if needed. For example, if the front flyscreen door is damaged you must make sure the condition report states this. If it doesn't, notify the real estate agent. Make sure you complete the condition report within the time frame you're given - and it's a good idea to keep a copy of it yourself.
Other special terms are covered as well such as if you are allowed pets. If you don’t keep to the agreement, you could be evicted and lose your bond. A bond is a sum of money that you must pay in addition to your rent before moving in.
Now, ask another question.
Great! Just sign here, and date here...done! Congratulations, you are now responsible for paying the rent and maintaining the property.
The key thing to note here is that you have signed the contract. This is a share house, but you have just signed the contract as the person responsible, even though you will be sharing the house with friends. How much is the rent? Have you worked out a budget to cover the rent and other living expenses? If you're the only one on the contract, can you pay all the rent if your housemates are late with a payment or move out? You’ll be responsible for all the rent payments if you are the only person who has signed the contract. Remember that more than one person can sign the contract.
Some people do rent directly off the home owner and sometimes a legal rental agreement has not been created. This means the home owner could evict the tenants or raise the rent whenever they want. By going through an agent, both the home owner and the tenants have clear rights and responsibilities.
The rental agreement you sign is a legal contract between you and the owner or real estate agent. It means you are responsible for the condition of the property and the cost of renting it. So if you let someone move in you are responsible for any rent they fail to pay or damages they cause.
So, do you have your bond sorted yet?
It's a good idea to make sure everyone signs the rental agreement. A formal agreement like this protects you and gives you rights so you can’t just be evicted next week or get slugged with a massive rent increase after a few months. If someone new moves in, you should ensure that they are added to the rental agreement.
Informal agreements between you and the home owner, or between you and the housemates, are risky because you may not have the same legal protection.
What else do you want to ask?
A bond is a sum of money that you must pay in addition to your rent before moving in. It's usually about the same amount as one month's rent payments. This money is put into a separate account for safe keeping, though where it is stored varies across Australian states and territories. It is held for the term of the rental agreement. This means nobody can take it without proper authorisation.
But if you leave with rent owing or have damaged the property during the period of time you lived there, the homeowner can apply to keep the bond to cover their losses.
Of course there is the bond, usually equivalent to a month’s rent and it's paid before you move in, as well as your first two week's rent in advance. Then there’s all your setup fees like getting utilities connected, removalist fees if you pay someone to move your stuff in, maybe you need furniture, linen, kitchen stuff and so on.
I’ve seen plenty of share houses fall apart because of money. Make sure you and your housemates have a budget. It will help you all to keep track of what you are spending and help plan for any unexpected expenses that might pop up.
The real costs are the ongoing ones. Food, phone, internet, gas, electricity, oh and maybe garden maintenance – under some rental agreements you may need to keep the grass mowed, weeds controlled and so on. Often if you move into a unit block there will be an Owner's Corporation (sometimes called a Body Corporate) that will look after that type of thing. If there is no Owner's Corporation you can do it yourself, or you may prefer to pay someone to do it for you. Check and understand what your responsibilities are before you sign the lease.
This is on top of everything else you spend money on each month, like your food, mobile phone, car, public transport, health insurance, gym membership and going out for example. Also, costs can be higher at different times of the year. For example, in summer your electricity bill can go up if you're using air conditioning.
What else do you want to ask?
You can be kicked out, or evicted as we call it, for a number of reasons.
The main reasons are for causing significant damage to the property or falling behind on your rent. However also be aware that if your neighbours complain about noise too often you might get asked to move out, so be respectful of those living around you. And check your agreement before having a pet join your household. A lot of homeowners won't allow animals to live on their property and can ask you to get rid of your pet, or leave.
But you always get at least one chance to fix things or catch up on your rent before you are evicted. This is an example of how a formal rental agreement can give you some protection.
If you think you’re going to be late with your rent or have any kind of problem with the property, talk to the agent first. Don’t just ignore it, because you will be legally required to fix the damage and/or leave the property if you don't deal with it. If this happens you could get a reputation as a bad tenant, you might not get a reference, and may find it difficult to rent again in the future.
If you think you’re going to be late with the rent or have any kind of problem with the property, come and talk with us first. Don’t just ignore it, because you will be legally required to fix the damage and/or vacate the premises if you don't deal with it.
If you want to talk to someone independent, there are consumer protection or fair trading services in every State and Territory who will give you free advice. There are also tenancy unions and groups that can advise you. Free financial counsellors can also assist you with budgeting and debt management.
Yes, remember to make sure you fill out that detailed condition report I mentioned earlier. Take photos, document any damage you find and include a description of the condition of every room.
If you don’t do this, we will rely on the previous condition report, which may not list damage that the previous tenants caused. This could mean you'll be financially liable for damage that you didn’t cause.
As long as you set a budget and stick to it, get everyone’s name on the rental agreement, avoid damaging the house and keep up to date with your rent, then you should be fine. More than fine, you just might have the time of your life!