Tenants and landlords both need to understand how rent is charged and paid.
How landlords charge rent
A landlord can ask for 1 or 2 weeks’ rent in advance during the tenancy. This usually depends on whether the tenant will pay rent weekly (1 week in advance) or fortnightly (2 weeks in advance).
It is unlawful for a landlord to ask the tenant to pay more than 2 weeks’ rent in advance. A landlord also can’t ask for the next rent payment until all the paid rent has been used up.
Here’s an example:
A tenancy agreement begins on 1 February. The tenant pays 2 weeks’ rent as bond and 2 weeks’ rent in advance. The 2 weeks’ rent in advance pays for the 1–14 February. The tenant does not have to pay rent again until 15 February. On that date, they’ll pay a further 2 weeks’ rent in advance for the 15–28 February.
Landlords cannot encourage rental bidding
From 11 February 2021, landlords cannot invite or encourage rental bidding when renting out a property. This law change is part of the Residential Tenancies Amendment Act 2020.
Rental properties cannot be advertised without a rental price listed, and the price must be stated in advertisements or offers for the property. This does not apply to service tenancies.
Landlords cannot invite or encourage prospective tenants to pay more rent for a property than is stated in the advertisement or offer. This means they cannot organise an auction over a rental property, or offer to give the rental to a tenant if they agree to pay more for it.
Prospective tenants or any other person can still voluntarily offer to pay more than the stated amount of rent and a landlord may accept this offer.
How tenants pay rent
The tenant and the landlord must agree on how the rent will be paid. This information must be included in the tenancy agreement. Rent is usually paid in one of the following ways:
- automatic payment
- cash cheque
- non-negotiable personal cheque
The landlord must give receipts when no other payment record is available to the tenant. Landlords must also keep rent records and the tenant can ask for a copy of these at any time. It’s a good idea for tenants to keep receipts and their own rent record.
If a landlord is also the tenant’s employer
If a landlord is also the tenant’s employer and takes the rent out of the tenant’s pay, this is known as a service tenancy. For service tenancies, special rules apply for rent paid in advance.
What’s market rent?
Market rent is what a landlord might reasonably expect to receive and a tenant might reasonably expect to pay for the rental property. It must be comparable to the rent charged for other properties of a similar type, size and location.