If you’re ready to rent out your property privately, you’ve got a very exciting time ahead! You’ve done the prep, you’ve found a tenant, and best of all—you’re going to save a stack of cash by doing it all yourself.
Before the lease properly commences, though, there’s a few things to do—one of which is drawing up your private rental agreement.
The task may sound involved and daunting, but we’ll illuminate the process for you in this blog.
It’s as easy as following a recipe!
1. Grab a template that’s relevant to your state.
All private rental agreements need to adhere to specific legal requirements set out by your state government, so in most cases, they won’t vary from the one an agent uses. Once you’ve looked at an example contract, you’ll have a good idea of how yours will look.
However, they do vary slightly between states and territories, so a quick Google search will find a template that’s right for you. Or check the state-by-state guides in the footer of this page to get the skinny on renting privately in your neck of the woods.
2. Know what you DO and DON’T need to include in the contract.
It’s natural to feel overwhelmed when writing up a contract for a tenancy. After all, you’ve got your property’s best interests at heart! You want to protect it from potential damage and mistreatment throughout the tenancy.
Luckily, a rental agreement automatically includes some things, so you won’t need to lay them out in black and white.
Read on to learn about the difference between express and implied terms and what they mean for your private rental agreement.
What you DON’T need to include in your private rental agreement.
When it comes to renting out your property, some things just don’t need to be said. These are known as implied terms and include:
- You (as the landlord) will see to basic repairs as needed.
- The tenant is obligated to provide access for repair work.
- The tenant will be respectful to the property and use appliances and fixtures appropriately.
- The tenant won’t be bothered by the landlord unnecessarily.
Don’t include any of these items in your agreement, as Australian tenancy laws will still cover you if the occupant makes any breaches throughout the lease.
What you DO need to include in your private rental agreement.
Here’s what you will need to include in your contract:
- The agreed price of rent and the method in which it’s to be paid.
- How and when you’ll increase rent.
- The length of the lease.
- The bond amount and how it will be stored.
Any special agreements that you’ve made with the tenant (if pets are allowed inside, for example).
Click here for a complete list of express terms that could be included in your contract if you live in Victoria. Remember, available terms differ around Australia, so be sure to check the requirements in your state.
3. Decide what kind of lease you want – fixed or periodic.
The type of private rental agreement you choose depends on what you plan to do with your property. Here’s our quick guide to each:
- Fixed-term tenancies last for a set time (such as a year), after which you and your tenant can agree to an additional fixed-term agreement. If you don’t, the lease automatically reverts to a periodic (month-to-month) agreement until one party gives notice.
Fixed-term agreements also specify when you can increase the rent. Typically, this can be every six months, although it can be as little as 60 days or as much as a year, so seek advice before committing to a timeframe.
These kinds of rental agreements are great for assuring a guaranteed income. However, if your circumstances change, the downside is that you can only end the tenancy with your renter’s consent (unless they break the conditions of the agreement, like not paying rent or damaging your property).
- A periodic tenancy is a month-to-month agreement with an end date that you must specify in writing. As a landlord, you’ll typically need to give more notice than your tenants if you want to end the agreement, but the rules vary from state to state.
Periodic tenancies are very flexible. You can ask the tenant to leave at any time, provided you follow your state’s notice requirements. They’re a great option if you think you might want to renovate the property soon, move in, or sell up.
TLDR: In short, periodic tenancies offer the flexibility to move out tenants when you want, while fixed-term tenancies can give you more financial security over the term of the agreement so that you can set a firm budget.
4. Review & sign your private rental agreement.
A private rental agreement is a legally binding document, and you should treat it as such. Be sure it not only reads professionally but presents well too. We’re talking about spelling, grammar, and formatting here.
When reviewing something you’ve written, it’s always best to leave it a day or two and come back to it with a fresh set of eyes. Even better, get someone else to read over the document and check for obvious mistakes in your spelling and grammar.
Finally, read over the content one final time to be sure you’ve included all the express terms you need. Your rental agreement automatically covers implied terms of tenancy, but any express terms left out won’t be covered. Make sure you’ve included everything you want, and you’re all done!
Sign & date the rental agreement yourself before sending it off to your new tenant. Be sure to let them know they can ask you any questions before signing. They’ll need to return their signed copy to you before you hand over the keys.
By following this guide, you’ll have the knowledge and resources you need to prepare your private rental agreement. Remember, you can always consult a solicitor to check what you’ve drawn up if you want that extra peace of mind.
Once both you and your new tenant have signed the agreement, you’re all set! For more information, read our guide on renting out your property.
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