Navigating the Australian rental market isn’t easy. Before you begin your search, you need to determine whether you’re looking for a short-term or long-term agreement.
Unsure where you stand? Consider these pros and cons for periodic agreements and then decide what makes the most sense for your needs.
When you don’t sign a new lease at the end of your tenancy (which is typically 6 or 12 months in Australia), you’ll be renting on a periodic agreement (or a month-by-month) agreement. This means your real estate agent or landlord has consented to your tenancy outside of a fixed-term. This is good and bad – depending on how you look at it. You’ll still have the same renter’s rights, but your rent could be raised – which is something that can’t happen within a fixed-term period unless it’s specified when you re-sign your lease.
In Australia, periodic agreements do offer tenants some flexibility. But what other advantages and disadvantages are worth considering before you sign your next lease?
Pro: Greater flexibility
Paying month-to-month, you (as the tenant) are in greater control and can dictate when you want to end the tenancy. If your circumstances change, it’s easy to terminate your agreement. You can leave at any time after you receive an agent-issued termination notice and only pay rent until the day you hand in the keys or vacate the premises (whichever is later).
Pro: You can (usually) switch to a long-term lease
If you’re a good tenant, your landlord may be open to you converting to a 12-month lease down the track. But there are some circumstances where this won’t be the case. For example, if they’re planning to make the property their primary residence sometime soon, you’ll need to find a new place to live. It’s wise to ask your landlord (or your agent) what the plan is before you sign a lease.
Pro: Many apartments come fully furnished
Some apartments which suit periodic tenancies are designed for short-term tenants, and they will often come fully furnished. Residential buildings close to universities, for example, are ideal for students or interns. Furnished rentals can be convenient if you’re looking for a long-term home.
Con: Your rent isn’t fixed
Arguably, the biggest benefit of signing a fixed-term lease is that you’re able to lock in your rental rate, which can make it easier to manage your budget. If you’re on a periodic agreement, your landlord could decide to raise your rent on a whim.
Con: Moving isn’t cheap!
If you go from one short-term lease to the next, you’ll start burning money that you could be putting towards other important things in your life. Even without a professional mover, your lease may require fees to cover your application, utility transfers and the bond clean. Moreover, there’s often lag time regarding your previous landlord releasing your rental bond.
Con: You might have fewer options
Property owners and private landlords tend to prefer a long-term lease. It offers guaranteed income over a set period and reduces the risk that their property will be sitting vacant for long periods in between tenants, which could mean you have fewer options if you’re looking for a short-term rental.
If you like the rental property you’re in and wouldn’t mind staying on for another six to 12 months then there is no real reason not to opt for a fixed-term agreement. Be aware that the property owner might decide they want a tenant on a fixed-term and end your lease if you refuse to sign again.
On a periodic agreement, you’re bound by the same conditions: Routine inspections, rent increases, etc. The critical difference here is that on a periodic lease, EITHER party (you or the landlord) can decide to end it with relatively short notice.
If there’s any likelihood you might want to relocate at some stage in the not-too-distant future, you could need the flexibility of a periodic lease.