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Read it again. It says “sign the contract”. It doesn’t say “read the contract and then sign the contract”. Rental agreement is a very important document and yet most people don’t read it, they listen to what the agent explains about the contract, but the document itself is long and boring, so why bother.

Let me give you 5 reasons why you should read the rental agreement.

1. Real estate agents are people and people make mistakes. I have rented 3 different houses and in every contract they gave me to sign, there were mistakes - in dates, in amounts, in various details.

If they put the wrong commencement date, you can end up paying rent for longer than you should. If they put the wrong amount, you can pay more than was advertised.

If they spell your name incorrectly it can backfire in all kinds of ways, including you not getting your rent assistance money from the government.

2. Rent is normally due on a certain date of the month. If you don’t read your contract, you don’t know when that date is. You don’t know when that date is - you miss a payment, and if you miss a payment, expect trouble.

3. Although the contracts are mostly standard, some landlords insist on adding specific paragraphs about what the tenants can’t do. If you don’t read the agreement, you can affix an antenna on the roof only to receive a phone call from the agency kindly asking you to remove the bloody thing ASAP.

4. If there is a special condition you’ve negotiated with the landlord (such as keeping a pet in the rental property), you would want to check that it was added to the contract. As I already said, these contract are standard and any additions can be left out and forgotten.

5. You can assume that certain things are landlord’s responsibility when they are really yours - and the contract says so. For example, changing light globes, replacing batteries in smoke detectors or dealing with pests may seem like something the owner of the house need to take care of, but according to most contracts those are tenants’ responsibility.

The same applies to garden maintenance. You may think: “So what if I’m renting a place with a garden, does it make me a gardener?”. The answer is “No, but you still need to water the trees and to mow the lawn”.

As you can see, there are enough reasons why you want to read the rental agreement - and to pay attention as well while you’re at it.

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I was hoping we’d win and when Chapeau announced Homeiown the Best Blog of 2009 in Real Estate and Development Industry, for a moment, I couldn’t believe it. And then I felt a lot of things all at once:

• Happy, because my work is appreciated
• Grateful to YOU for choosing me
• Motivated to keep up the good work
• Contented. No idea why.

I couldn’t do it on my own - but you, my readers, my subscribers, my fellow bloggers, all of you helped me. You are reading my stuff, you are sharing your thoughts, you are inspiring me to work harder and get better. There is no paycheck other than your appreciation - and to me it’s enough.

So thank y’all and have a beautiful glorious day - I know I will!

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The cheapest parking is, of course, street parking. Houses that have only a street parking and don’t even have a right of way (meaning they don’t have an entrance from the street to a driveway) are considered less valuable than houses with a right of way (of course this comparison is only valid within the same area).

Driveway

The more attractive option is the driveway. A car (or cars, if there’s enough room) can be parked in a driveway, and if it is parked behind a gate, then it is called a secure parking.

Carport

A carport is the next best thing. We call a carport a roof supported by 4 posts, it can be either free standing or attached to the house. There are usually no walls, so the carport is a shelter for a car - although not an ideal one. It will keep the car protected from the rain and from the harmful UV radiation, but won’t protect you from the wind as you are getting in or out the car.

When I bought my first car in Australia and was getting it insured, I had trouble answering a very simple question: “Is the car parked in a carport or a garage?”. I simply couldn’t tell the difference between a carport and a garage - well, here is the explanation:

Garage

The best car parking is a garage. Garage is a building, a part of the house or a free-standing one, it has a roof and 4 walls, with a roller (or whatever else) door for the car. Normally there is access from the garage to the house, so can leave the car go straight into the house. A garage is often used as an extra storage space - in fact, many people don’t leave much room for the car

Double garage

And the ultimate best is a double garage - a garage for two cars. If there are two cars in the household and only a single garage, it means that somebody is always blocking somebody else, which is a nuisance and can cause lots of arguments. Double garage takes that headache away, because the two cars are parked side by side with neither one blocking the access to driveway.

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Let’s start with baby boomers. Baby boomers are the generation that was born between years 1946-1961. The nickname implies the soaring childbirth rates 9 months after the WWII ended and the servicemen came home. Right now baby boomers are in their 40s, 50s or 60s, they are representing the high income bracket and are the major players in the real estate market. No wonder - they entered the workforce much younger than any of today’s young adults (age 21 as compared to 27), move out of their parents’ homes early and started to manage their own financed at a younger age. Also the house price to income ratio used to be 3.8 to 1 back then (whereas it is 9 to 1 now), which means that the housing was 3 times more affordable for baby boomers than it is now. This pretty much explains why many of baby boomers are high profile investors at present.

Generation X are people born in the 1965 - 1976. They are today’s young professionals and real-estate-wise can be characterized as apartments-favoring buyers. Their lifestyle demands living close to the CBD and being unable to afford full size houses, they compromise on the space but not on the location. On top of housing affordability issues generation X is paying more tax as compared to its predecessors, which makes it harder for them to purchase a full size house within 20 km of work.

Generation Me are people born in 1970 - 1990. The name describes the nature of this generation. These folks never had to put anything else above their own good. It’s not that they are selfish - they believe that everything starts with the needs of an individual. Right now they are in their 30s - 20s (or even teenagers), didn’t live long enough to make/save a lot of money, which means they are not wealthy, and therefore don’t affect much the real estate market.

Generation Y consists of people born between 1980 - 1995. They are the offsprings of baby boomers and have grown up during the longest boom in Australia’s history. Many of them fell victims of bad lending practices of financial institutions, in other words it means that they are up to ears in debt, and many more are heading there because banks are continuously targeting these young people, selling them pre-approved credit cards, etc. Generation Y’ers are not prepared to sacrifice their lifestyle, which makes them renters rather than home buyers, because there is no way they can afford to buy a property close to the CBD.

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However, there are parts of the water bill that only the landlord has to pay, not the tenant - I am talking about the amounts that are listed on the water bill under “service charges” and “other charges”. Service charges are the fees for accessing the water and the sewage systems and apply even if no one was using the water/sewage, a kind of flat fee. Other charges include drainage charge and Parks charge and are only paid by the property owner.

On top of the water bill, in addition to the rent, a tenant should expect to pay for the electricity, gas, phone, internet access, paid TV, renters insurance (if you choose to have it). There is also a one-off payment of the bond that roughly equals to monthly rent and payable before a tenant moves in (read more about it here).

If this is your first home in Australia and you don’t have any accounts opened with energy suppliers or phone companies, then you should also expect a set-up fee with every company where you first establish an account. Some phone companies will also charge you for connecting your land line and the same applies to the paid TV. If you do have accounts with energy, phone and internet companies, then another set of fees applies - relocation fees. There is no way you can avoid these fees, but it helps if you know in advance about them and can adjust your budget accordingly.

And finally some figures: (keep in mind that these are rough estimates that I’ve found in the Energy and Water Ombudsmen website)

• The average energy usage for 12 months is 6500 kilowatt hours and it costs around $1000 for the year.
• The average gas usage for 12 months is 60 gigajoules and it costs around $800 - $850 for the year
• The average water usage for 12 months should cost anything in the $500 - $1000 range.
• The cheapest phone line rental is $30 a months and that doesn’t include whatever the calls cost.

What else would you like to know about renting in Australia? Leave a comment and I will find out for you.

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• Home/Contents Insurance
• Mortgage Insurance
• Landlords insurance
• Renters insurance

The difference between those is mainly the reason why would you get such insurance.

Home insurance can mean two kinds of insurance - a building insurance and a contents insurance. Building insurance is there to cover your house (as in the structure itself, the walls and the roof) in case it is damaged by fire, storm, faults, explosions or a third party. Contents insurance is there to cover your belongings and items contained within the house, such as furniture, appliances, jewelry, etc.

Almost always if you’ve bought a house with a mortgage, your lender will require a building insurance - not to be confused with a mortgage insurance, explained below.

Mortgage insurance (also known as mortgage payment protection) covers you in case you miss mortgage payments. The reasons why anyone would consider it are a possible unemployment, an injury or a sickness and the following loss of income. If you can’t make your payments for over a month, then the insurance company will start making them on your behalf.

In many cases lenders have a requirement of mortgage insurance, when the loan on property is for more than 80% of its value. As a rule, the greater the percentage of the property value you borrow and the more money you borrow, the higher the mortgage insurance premium will be. The premium is usually a one-off amount payable at settlement.

Landlords insurance is for people who own and rent out a property. It is there to cover damage to the property, people that got injured on that property (fall in the bathroom for example), tenants that stop paying rent and the like.

A thing to remember - it might not cover accidental damage to the property (such as tenant having a kitchen accident and burning the benchtop), check with your insurance company. The accidental damage clause is important for both the tenant and the landlord, because in case accidents are not covered, the tenant is liable for all the damage, and if he/she disputes it then it becomes the landlord’s problem (here is another discussion of this issue).

Renters insurance is very similar to contents insurance, it is there to cover your belongings as a renter in case of accidental damage from events like fire or burglary. The building is insured by the landlord but your contents are your responsibility and depending on the cost of the items you have such insurance might be a good idea. Some companies will even cover 2 properties on the day that you move, so if anything gets stolen it will be replaced or paid for by the insurance.

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How to break a lease

You have to give a notice to the landlord / his agent as soon as possible and in writing that you intend to leave on a particular date. When you move out and return the keys in that date, your tenancy ends and you can stop paying rent.

What it costs the tenant to break the lease

Because of your leaving early the landlord is entitled to compensation. You will need to compensate him

1) for the loss of rent that he would otherwise be getting and

2) for the costs he incurred to advertise the house again.

This means that you’ll have to pay the rent until a new tenant is found or until your fixed term lease ends. The good news is that the compensation is limited to 25 week’s rent, so even if you’ve just signed for a year and after 3 months had to leave they can’t charge you for the whole remaining 9 months.

Speaking of costs of re-letting the house again, these too have limit. Under no circumstances your landlord can ask for more than a week’s rent to cover these costs. And no matter how much they ask for, request an itemized list specifying all of their expenses to justify the bill. In other words they can’t just charge you a “re-letting fee” of one week’s rent without explaining what exactly they spent that money on and proving that the money was actually spent.

I have heard from friends about cases where the landlord wasn’t trying to find a new tenant and just kept charging the tenants that broke the lease because that was easier for him. You should know that it is actually illegal, and the landlord is not entitled for compensation for loss that could have been minimized or avoided if they had the house advertised for rent. If this is happening to you, here is what you can do:

• Make sure that the agency is advertising the house for rent
• Make sure they haven’t increased the rent (because obviously that will attract fewer prospective tenants)
• Don’t pay the rent (the compensation) up front - you should be compensating for the loss that the landlord has suffered, not covering anticipated loss.
• Until they find a new tenant, keep checking that the house is advertised. If they take it off the market for renovations, you shouldn’t be paying the compensation.

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It is against the law to discriminate against tenants with kids. The only exceptions to this rule are:

• when if the property is unsafe for your little ones
• when the property is owned by government and is intended for childless people or
• when the property is place of residence of the landlord, who is temporarily renting it but will be returning

The bond

The bond can’t be higher than 1 month’s rent. If the landlord or the agent wants to get a higher bond, they have to go to VCAT (Victorian Civil & Administrative Tribunal) and get approval.

The only exceptions to this rule are

• when weekly rent is higher than $350 and
• when the house is landlord’s place of residence and the tenant will only live there until the landlord moves back in. There should be a clause in your tenancy agreement saying so.

In those two cases the bond is unlimited.

Another important thing to know is that the amount of the bond is only set once and can not be increased while you are renting.

What if they do demand a higher bond without any bases? You can complain to VCAT and they will be fined $500.

The rent

Rent is paid in advance, so the first question that rises – how much in advance?
If you pay on weekly bases - nobody can demand more than 2 weeks of rent in advance.
If you are not paying weekly and a week’s rent is less than $350 - only pay in advance for one month of rent.

If rent wasn’t paid on time

Even if you forgot to pay the rent and paid the next day or even next week – they can not throw you out. Only after 14 days of not paying the rent, agent/landlord has the right to give a tenant notice to vacate.

Ways of paying the rent

No matter how you pay, via direct debit, rent payment card or otherwise, they can not charge you for issuing a rent card or creating a direct debit agreement.

What if they do? Complain and they will get a $1000 fine.

Rent increase

If you have a fixed agreement – they simply can not increase rent. When you’re on periodic agreement, they can’t increase your rental payments unless there is a clause about it in your agreement. That clause should also say how much they can increase the rent.

You are completely safe in the first 6 months of tenancy and they can’t increase more than twice a year, 6 month between the increases. By law you must be notified 60 days before the increase in a written form.

Inspections

Neither the landlord nor the agent can come and inspect your rental during the first three months. After tat they can come once every 6 months and must give you at least 24 hours written notice. Also they can’t barge in on you any time – only between 8am and 6pm and never on public holidays.

Leaving your rental property

To leave a rental (in the middle or in the end of contract) all you have to do is to send a written notice to the agent by registered mail 28 days (at least) before the day you move.

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You can really get a feel of the neighborhood by looking at cars parked in everyone’s driveways or looking at the types of the other houses in the area. It is easy to see if the neighbors have kids (look for prams, little bikes or swings in front of the house) or dogs (sign on the fence). It is just as good as being there.

This little video explains how to use the Street Level

Try the Street Level – it’s amazingly cool and useful!

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Electricity, water, gas, phone, paid TV should be disconnected, mail - redirected.

Cleaning upon vacating

Getting your bond back largely depends on the condition you leave the rental house in. Basically it should look exactly the same as when you moved in (well, except for some reasonable wear and tear). After moving all of your possessions out of the house, do not forget to clean:

Stove – including the inside, trays, door, and outside, clean exhaust fan covers too.
Windows, blinds, venetians and air vents need dusting and wiping
Cupboards – wipe inside and outside
Marks on walls and doors – wipe
Light fittings need dusting
Bathrooms, showers (including shower screens) and toilets
Floors needs mopping and carpets – vacuuming/steam cleaning
Lawns need mowing

Take pictures

If you can’t be there when the landlord/agent are inspecting the house, it’s a good idea to take pictures of every room in the house as a proof that you’ve left it spotless and deserve to get your full bond back.

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