Renting a unit in Sydney or Melbourne? Why it’s time to ask for a rent cut
With average unit rents falling sharply in Sydney and Melbourne, tenants have more bargaining power now.
The median rental prices for apartments in Sydney and Melbourne have fallen over the last few months. Unit rents in Sydney are now at 2013 levels. In Melbourne, unit rents haven't been this low since 2016.
This puts apartment renters in Australia's two biggest cities in a position to find lower rent properties or even renegotiate their current leases.
Rental price data comes from Domain's latest Rental Report. The report also shows that house rents in Sydney are up 1.9% for the quarter and flat in Melbourne. And in Australia's other capital cities, rents are surging for both units and houses.
You can see the data below.
Median rent changes December 2020 (quarter on quarter) from Domain
|City||House rent||Unit rent|
Source: Domain Rental Report, December 2020
Renters in Sydney and Melbourne, especially those in apartments, are now in a strong position to get a better deal. And there are some smart ways to go about getting lower rent.
This is a trend that Tenants' Union of NSW CEO Leo Patterson Ross has also seen. He told Finder, "Some people are trying to stay where they are and negotiate better rent. They feel their current rent is too high compared to the market, so they're saying to their landlords, look if we don't negotiate then I can get a better deal somewhere else."
People trying to negotiate a better deal with their landlords have more success "around the time that their lease is going to be up anyway".
Tenants who want to successfully negotiate a lower rent with their landlord need to do their research.
"Getting real-world examples like actual advertisements of other places that you can point to and show the similarities of size and quality helps to show the landlord how the market has moved," said Patterson Ross.
This, combined with "the broader statistics showing the median rent has dropped by 10%. The two together tend to be more persuasive than one or the other."
And if that doesn't work, a tenant looking for a better deal has to mean what they say. And that means actually going somewhere else if you can't negotiate with your landlord or agent.
"We would recommend being specific with a proposal," said Patterson Ross. "We wouldn't recommend just saying 'I would like a reduction. Let's talk about what that would be.' It's better to say 'I've looked at the market. The rent now for this property is around $400 a week.' If you think it's a range between $400 and $450, start with $400. And then the landlord can get back to you and negotiate from there."
Renters in financial distress
The eviction moratorium is still in place for many renters affected by COVID-19. In NSW, it has been extended until 26 March 2021. In Victoria, the moratorium runs until 28 March.
This means that renters who are struggling to pay the rent are better protected against eviction. The law also obliges landlords to try to negotiate with their tenants on rent reductions.
For tenants in financial distress, the same suggestions apply. Bring data about current rental prices to back up your case, and be prepared to show how you've been affected financially.
"It's much better for a landlord to negotiate with a sitting tenant than to list an empty property for a lot longer," said Patterson Ross.
Check out the Tenants' Union of NSW COVID-19 guide for more tips and help.
Put rental savings to good use
If you are able to negotiate a lower rent and your income hasn't fallen during the pandemic, then you'll find yourself in a better position to save.
Let's say you negotiate your rent down from $520 to the current Sydney median unit rent of $470. That $50 a week saving amounts to $2,600 over the course of a year.
While not a huge amount of money, you could put that cash towards the following:
And with home loan interest rates so low right now, you might be surprised to find that home loan repayments aren't that much higher than your rent.
Let's say you borrowed $400,000 over 30 years to buy a home. Your interest rate is a competitive 2.30%. Your monthly repayments would amount to $1,539. That ends up being less per month than the median Sydney unit rent of $470 a week.
Of course, the challenge of saving a deposit for a home loan remains a big hurdle for first home buyers.