Part 2 - Applying for a Rental Property

Part 2 - Applying for a Rental Property

(Credits to: Daniel Butkovich, Domain.com.au )

When applying for a rental property, you’ll need to submit an application, which generally involves filling out a form and providing as many details as required by the property manager or landlord.

Once you’ve found a property you like, it’s best to provide as much information as possible and apply quickly to give yourself the best chance of being accepted.

What do real estate agents look for on rental applications?

Applying for a rental property can be competitive, especially if multiple parties are interested in the one property.

The application will usually require prospective renters to provide the following details:

• Identification – property managers may want to conduct background checks.
• Renting history – landlords may prefer to rent the property to tenants who have a proven track record of paying rent on time and looking after a property.
• Employment – landlords will want to ensure tenants are able to pay the rent on time.
• References – property managers may contact referees such as previous managing agents, employers or character references.

Be sure to answer every question on the application properly. Real estate agents report up to 30 per cent of applicants leave details off, which is often the difference between a successful application and a rejected one.

It is recommended to provide as many financial details as possible to show your ability to pay rent. Pay slips, bank statements and a current employment contract or a letter from your employer stating your salary are all ways of providing evidence of your regular income.

If you’re applying with other people, try and provide all your details together to make this process as simple as possible for your property manager.

If you have previously rented, ask your past property manager to provide a rental ledger, which is a complete statement of every rent payment you’ve previously made. You can include the rental ledger on your application to show proof of being a reliable past tenant.

How much do you need for a bond?

Each Australian state and territory has its own rules about how much can be legally charged for the bond (sometimes referred to as a security deposit).

• QLD: Maximum four weeks’ rent for properties under $700 a week. The law gives no maximum amount where the weekly rent is higher than $700.
• VIC: Maximum one month’s rent for properties under $350 a week. The law gives no maximum amount where the weekly rent is higher than $350.
• WA: Maximum four weeks’ rent for properties under $1200 a week. The law gives no maximum amount where the weekly rent is higher than $1200.
• SA: Maximum four weeks’ rent for properties under $250 a week. Maximum six weeks’ rent for properties over $250 a week.
• NSW: Maximum four weeks’ rent.
• NT: Maximum four weeks’ rent.
• ACT: Maximum four weeks’ rent.
• TAS: Maximum four weeks’ rent.

In instances where there is no maximum bond, the online listing for a rental property will usually state the amount of bond to be paid. This will also be clearly stated on your lease.

In most states, your real estate agent is responsible for lodging your bond with the appropriate government body. In Victoria, for example, this is the Residential Tenancies Bond Authority (RTBA). Once lodged, the agent will provide the tenant with a bond receipt/ID number.

Some areas including Northern Territory do not have a centralised bond institution but the renter is entitled to receive a legal receipt from the landlord to acknowledge that the bond has been paid.

Should you offer higher rent to get ahead of the competition?

It is not uncommon for prospective renters to offer above the asking rental price in the hopes of securing a coveted property. This practice is commonly referred to as rental bidding. A 2016 Consumer Affairs Victoria report estimated that one in five Victorian tenants offer to pay more than the advertised rent.

Rental bidding is controversial as it is believed to inflate rents. It’s not currently illegal except in Queensland, where landlords are not allowed to initiate this process but can accept offers independently proposed by tenants. Laws recently passed in Victoria will outlaw rental bidding from July 2020.

Those considering offering more than the advertised rent should first consider their financial position. As a rule of thumb, affordable rent is considered to be no more than 30 per cent of household income. If rental bidding sees a tenant paying more than 30 per cent of their household income to rent a property, they will likely be in “rental stress”.

Why do my rental applications keep getting rejected?

It is common for renters to be rejected for a handful of properties before eventually being successful, especially in a competitive marketplace. If you have been rejected and would like to know why, you can ask the responsible property manager for feedback.

These are the most common reasons why an applicant’s rental property applications are repeatedly rejected:

• You haven’t provided enough evidence of your income

Real estate agents and landlords want to be assured a tenant can pay their rent on time every month, and the best way to determine this is through the financial information provided on their application.

Ensure that with every rental application you’re providing evidence of your income to support paying regular rent, such as pay slips, a bank statement, your most recent tax return, Centrelink income statement, rental ledger, or a letter from your employer.

• You haven’t completed the application properly

Property managers say a high proportion of applicants simply don’t fill out the application property and completely. Ensure you answer every question stipulated on the form and provide clear supporting documents such as financial information, identification and suitable references.

• You’re applying for properties outside your price range

If the financial information you’ve provided on a rental application indicates your rent will exceed 30 per cent of your household income, many property managers will determine the property is out of your price range.

Renters who pay over 30 per cent of their household income on rent are considered to be in “housing stress” and are therefore more likely to get behind on rent payments, which property managers try to avoid.

• You didn’t apply quickly enough

Sometimes it’s simply a case of another party applying for a rental property before you.

To avoid this situation, rather than inspecting a property and then submitting an online application in the following days, you can fill out a hard copy application in advance and submit this at the open for inspection. Be sure to include any supporting documentation with the application, such as photocopies of your identification and pay slips.

How do leases work?

Once you’ve been accepted for a rental property, you’ll need to sign a lease, also known as a residential tenancy agreement. This is a legally binding agreement between a tenant and landlord that stipulates key information such as:

• how long a tenant can live in a property
• the rent amount, and how and when it is paid
• the bond amount
• any special conditions (such as whether or not you can have pets or whether you are able to light a fire in the fireplace)

A lease can be written or verbal, but written is recommended. It also needs to comply with the relevant state legislation.

There are two main types of residential leases – fixed term and periodic leases. A fixed-term lease is for a set period of time, usually six or 12 months.

Periodic leases, commonly called a “month-to-month” lease, typically commence upon agreement after a fixed-term lease ends.

A periodic lease has no specific end date and typically does not call for as much notice to be provided from tenants wishing to move on from the property and landlords wishing to end the leasing arrangement.

The amount of notice required is dependent on the grounds stipulated and the relevant state legislation.

(photo credit: Domain.com.au)