The Ultimate Guide to Paying Your Rent & Winning at Life.
More than 30% of Australian residents are renters, so whether it’s your first foray into property hunting (or your 10th), you’re not alone. To celebrate the launch of RentPay, we’re doing the math on renting so you don’t have to. Our guide to renting in Australia shares everything should know about the ins and outs of renting and how to manage your money and come out on top. See the full series.

Finding a new place to live isn’t easy, and it can be tough to know what you can afford to rent without cutting off your long-term financial goals.

Have you just started looking for rentals? If you’ve found the process a little overwhelming, you’re not alone. You need to decide on a suburb that works for your lifestyle, attend rental viewings, apply for properties and wait to hear whether you’ve been accepted. But before you dive in too deep, one of the most important things to do is ask yourself: how much rent can I afford?

Rentals come on and off the market quickly, so knowing what you can afford ahead of time will save you time, money and a lot of hassle!

How much rent can I afford? The 30% sweet spot

Generally speaking, the share of your income that should go towards paying your rent depends on a couple of factors, such as your income level and where you want to live.

Spending around 30% of your income on rent is generally considered the golden rule on finding the right property. It’s a percentage that should help you strike a balance between comfort and affordability. On a median income, spending around 30% should let you find a home and leave enough money to live your life, keep up with any outstanding debt and contribute to your savings.

But how would it look if you spent a little more (or less?)

20% of your income on rent30% of your income on rent40% of your income on rent
Feeling thrifty: Spending around 20% of your income on rent will give you more flexibility to spend on non-essentials. You may have to hold off renting better places (especially in the inner-city), but if you're cool with a compromise, 20% could be a solid strategy.That sweet spot: 30% is the rule most agents and landlords will consider when they're looking at applications. Spending 30% gives you a decent balance between comfort and affordability and should get you a rental property you can happily call home.Splurge a little: If you're earning an above-average income, putting aside 40% for an apartment could get you a rental in a better location and more living space. But remember that shelling out 10% extra can come with its own risks, so keep an eye on your spending habits.

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How do I calculate how much rent I can afford?

Working out how much you should be spending on rent is pretty simple on the 30% rule. Check out your payslip, and find the amount that goes into your bank account each pay. Then plug that number into a calculator as follows:

Weekly pay x 0.30 = target weekly rent

($1,000 x 0.30 = $300)

Using this example, someone earning $1,000 a week might aim to spend around $300 a week on rent because this is 30% of their income. This also works in reverse! If you’re currently renting a home for $450 a week and earning $1,000 a week, calculate it this way:

$450 / $1,000 = 0.45

In this example, someone earning $1,000 a week and paying $450 a week in rent would be spending 45% of their income on rent—possibly not ideal, short of picking up a few cheeky side hustles.

TL;DR: (too long, didn’t read)

  • Find the sweet spot in your budget between comfort and affordability 
  • Take your local rental market into account – it varies widely from place to place!
  • Consider additional savings or costs when you move and include these in your calculation

I don’t live alone, how do I calculate my rent?

Renting with a partner

If you’re renting with your SO, use your joint income as a guide to finding the appropriate rent range. Or, if you’re renting with a couple of roommates, you’d only apply the 30% rule to your portion of the rent.

Renting as a student

The rule won’t work for everyone, and it may be hard to find rental properties below 30% of your income on a student budget. Finding a super cheap (and reasonable) rental is also unlikely in the major capital cities. Think about on-site student accommodation, which can be more affordable, sharing with a bigger group of roommates, or even hanging with your folks until your income gets a sizeable boost.

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Are there any exceptions to this rule?

Even if you don’t meet the minimum income requirements, you can always boost your application by showing evidence of excellent credit, a solid amount of money in the bank, and proof of good payment history. In many cases, rental applications are looked at on a case-by-case basis.

Think about getting a guarantor

If you can’t get around the 30% thing, consider getting a guarantor. A guarantor is someone who is legally obliged to pay your rent if you cant. Above all else, a good way to give a landlord peace of mind is to find someone who can support your application and promise to pay your rental payments if you can’t meet them. A guarantor could be your parents or a family member. 

Other costs to consider besides your rent to income ratio

Don’t forget there are more costs to renting than just your weekly rent! In most cases, you’ll be asked to front a rental bond (security deposit) and rent in advance. You may also need to factor in transportation costs, especially if you’ve found a place that’s not super close to public transport. Taking these points into account should help you work out the right amount of rent for your budget.

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Working out what you can afford before you start your search will save you a lot of time. It also means you’ll only have to look for places that meet your budget and needs. Ask yourself about the lifestyle you want to live, calculate your budget (including your rent), and set up some solid financial goals for your future. 

Good luck!

Lauren Vardy
Lauren Vardy

Lauren Vardy is the Content Manager at Rent.com.au, Australia's largest company dedicated to renters (ASX:RNT). Lauren has worked with Rent.com.au since 2015 and manages the Rent.com.au Blog. Formerly a journalist with Fairfax Media and Rural Press, Lauren has worked with multiple media groups in Australia and internationally on a freelance basis through publications including the Esperance Express, Southeast Asia Globe, Colosoul Magazine, The Sunday Times, and more.

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