Leases and Rental Agreements

<em>Understand what to expect in the tenancy agreement when renting property in Australia...</em>

The Rental Agreement

Once a rental property is found, prospective tenants generally have to fill in a Tenancy Application Form so that landlords or estate agents can check credit history and references. Once the application to rent has been accepted, landlords or their agents must offer a tenant a written tenancy agreement before the tenant moves in or the tenancy starts. The lease sets out the rights and obligations of all parties and the tenant should be given a copy of the lease once all parties have signed it.

There are two types of tenancy agreement:

  1. Fixed term tenancy - a specific period of time
  2. Periodic tenancy - renewed on a weekly or monthly basis

Fixed-term Tenancy

In most cases the initial rental agreement is for six months, which can be extended. Tenancy agreements are in two parts:

  1. Terms of the agreement: The main document setting out what the tenant and landlord agree to do during the tenancy.
  2. Condition (inventory) report: Details the condition of the premises at the time the tenant moves in and provides an inventory of the premises.

The terms of the agreement will include the property's address, rental amount, method of payment and start and end date of the lease.

Standard rental agreement forms can be purchased from most newsagents, or a sample form can be downloaded.

The condition report is important if a dispute arises over the condition of the premises at the end of the tenancy and both parts of the document should be read and understood by both parties.

Most tenancy agreements are for a fixed-term (generally six or 12 months); however, tenancy periods can be fixed for any length of time. At the end of the fixed-term period, the tenancy agreement only ends if it is terminated by the tenant or the landlord. Tenancy can be renewed unless the landlord does not agree.

In most cases, the tenant will participate in the cost of drawing up the agreement (usually half the amount). This is a small fee and includes Goods and Services Tax (GST).

There can be costs involved if a lease is broken before the end of the term. This can be at least one month's rent as well as additional agent costs for finding a replacement tenant.

Deposit and Costs

Payment of rent in advance is required from the first day of the tenancy. This is generally one month's rent. In addition, a rental bond (deposit) is usually required. This is a form of security for the landlord in case tenants owe money for rent or there is damage to the premises at the end of the tenancy.

The amount of the rental bond can be as much as two month's rent in advance, but for lower weekly rents, the amount can be just two week's rent. The amount of the bond differs from state to state and depends on a number of factors including the amount of the rent and the type of tenancy agreement (furnished or unfurnished).

The bond is held by a third party and no amount can be deducted unless the landlord can prove damage by the tenant. Tenants should get a written receipt for the bond, and the amount paid should be included in the tenancy agreement. At the end of the tenancy, the landlord refunds the bond if there is no proven damage.

Council and water rates are the responsibility of the landlord. Other utility bills (electricity, gas, telephone) are to be paid by the tenant. There are usually costs involved in setting up new TV, Internet and utility contracts.