It’s a landlords’ rental market across Australia. Here are four tips for negotiating what you pay

Australia’s already-tight rental market is squeezing further – and if you’ve got a good deal, you’d better hold on tight.

Trying to find a new rental in the current market is tough.

SQM Research data shows national vacancy rates decreased 1 per cent in January as the total number of rental vacancies Australia-wide now stands at 31,592 residential properties, a decrease from 39,568 residential properties recorded in December.

Renting is also getting more expensive.

Over the year to February 12, national rents rose by 17.4 per cent, and rents being asked in capital cities rose 24.7 per cent. At time of writing, the national median weekly asking rent for a dwelling is $562 per week.

Sydney recorded the highest weekly rent for a house at $913 per week, while Adelaide units offer the best rental affordability of all capital cities at $401 per week.

With everything happening in the rental market, it’s understandable that renters will be approaching the end of their lease periods with more anxiety this year.

After all, landlords currently command the market.

“It’s extraordinarily difficult for renters of all persuasions, there’s far more renters than rental stock at this point in time,” SQM Research managing director Louis Christopher said.

Mr Christopher said while the market hasn’t seen this “extreme” level of demand since the 1970s, the market will eventually balance itself out.

In the meantime, renters wishing to hold on to their current living situation may have some tough conversations ahead.

Here are four expert tips on how to negotiate your rent if your lease period is up.

1. Do your research

Rents are going up all over the place. What are the weekly rents being advertised for properties similar to yours?

Mr Christopher said while doing this research will give you an idea of how much rents have risen lately for similar properties, it will also come in handy when rents eventually fall.

“There will come a time when rents will fall and tenants should also be aware of that situation too,” he said.

“Because then they’ll be in a better stand to negotiate, and what goes around comes around eventually, that’s just the way of the rental market.”

You should also take note of your rights and obligations.

These vary between states and territories, but generally include your landlord not being able to demand a rent increase in the midst of a 12-month lease.

However, once the lease period is over, landlords have the upper hand and are able to demand rent increases.

With landlords currently having their pick of potential tenants, new lease negotiations can easily become a take-it-or-leave-it situation, Better Renting executive director Joel Dignam said.

As far as obligations on renters go, the key ones include paying rent on time, and keeping the property clean and in good repair.

Renters that meet these basic obligations may find themselves with a bit more leniency in negotiations; after all, it might make sense for a landlord to stick with a renter they know and trust rather than take a risk on someone new, even if they’re willing to pay more.

2. Don’t be afraid to take the lead

If you feel prepared to get the ball rolling on new lease negotiations, there’s no reason you can’t reach out before your lease period is up.

“I think tenants could be more proactive and reach out to the landlord or the landlord’s agent … to kickstart the conversation,” Mr Christopher said.

“There’s no reason why one can’t come to an agreement before the [lease period] is over.”

Pay Rent Note On Calendar

Renting is getting tougher and tougher in Australia. Photo: Getty

3. Avoid third-parties

Mr Dignam said you should try negotiating directly with a landlord rather than through a third-party like a real estate agent, as the latter may have a vested interest in you paying more weekly rent.

He said most agents charge fees of a percentage of the weekly rent, so if weekly rent goes up, they’ll make more money.

They can also stand to get a payout if a tenant moves out; not only will they be able to increase the rent, an agent also gets to re-advertise the property, which means they’ll often get a relocation fee of up to two weeks of rent.

“We definitely hear about rent increases that aren’t coming from the landlord, but they’re really being initiated by the real estate agencies who have quite a bit of self-interest in having higher rents,” he said.

“Sometimes the landlord isn’t even aware of what’s been going on.

“If you can speak to the landlord, that is probably worthwhile to try.”

4. Know your limits

If you’ve got a good property, you might be willing to splash the cash in an effort to keep it.

But be mindful of what you can actually afford.

Mr Dignam said the general rule for those whose income puts them in the bottom two income quintiles is to not spend more than 30 per cent of your income on rent.

“If you’re spending more than 30 per cent of your income on rent, you’re going to be very stressed because you won’t actually have enough time to afford other things that you need to live,” he said.

“If your income is higher, then you can afford to spend more on rent and still have enough left over, but it’s still a good rule of thumb.”

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