It’s the news no tenant wants to hear: the rent is going up.
But while no one wants to fork out more cash than necessary, it is possible to survive a rent rise – using a healthy dose of realism and some planning.
Belinda White, who runs The Fierce Girl’s Guide to Finance, a “financial literacy resource for smart women”, says it’s wise to plan for potential rent hikes.
“Rental rises are governed by laws in each state and the restrictions on how often they can be imposed, and by how much, varies from state to state, so there are some protections for you as a tenant,” she says.
“The bigger buffer you give yourself with fixed costs like rent, the easier you’ll sleep at night.”
White says consistently putting money away can also help soften the blow.
“It’s always a good idea to have an emergency fund for anything life throws up at you; ideally at least three months’ living costs, ie rent, bills and groceries.
“But even a month’s savings is better than nothing and can really help get you out of a pickle, without resorting to costly credit cards,” she says.
Another trick is to offset rent rises by keeping a close eye on the other costs of renting, like insurance, internet and energy bills.
“You can often get a better deal after a year or two by shopping around or negotiating with your current provider. Don’t be afraid to talk them down,” White says.
For many tenants, a rent rise prompts them to consider moving, but don’t be rash.
“Don’t be afraid to negotiate! As annoying as it is to move, it’s also annoying for a landlord to find a new tenant. Check the local market and see if you can convince them of a reasonable amount,” she says.
“If it really is a done deal, do the sums. Is the annual cost as much as a removalist? What about the mental stress? It’s going to come down to the questions of can you afford the extra rent and the extra stress?” White says.
Renting can also be a “dry run” for life with a mortgage, according to White.
“Renting is definitely the time to form good habits that set you up for success later. Find a budget system that works for you; whether it’s an app, a spreadsheet or a nice notebook. Track your spending and look for leakages,” she says.
White recommends a free budgeting app from the Federal Government called TrackMySpend.
“It can be a real eye-opener! Try and save money above and beyond the rent for emergencies, but also long-term goals like a home deposit.
“There are advantages of renting, but in the long-term, home ownership can provide the peace of mind that comes with ‘owning your own patch’ and is often a good way to build wealth,” White says.
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