Trying to navigate the Victorian rental market has never been easy, but recent interest rate hikes by the Reserve Bank of Australia (RBA) have made it even tougher. And it’s not just the property owners who’ve had to pay more in monthly mortgage costs — renters are forking out a lot more too. When landlords have to pay more to their lender each month, the additional costs are passed onto renters, resulting in the astronomical rent hikes that we keep seeing day after day.
Even worse, the ‘cash rate’ that determines how affordable it is to maintain a home loan has soared in recent months, making buying a home more expensive and driving more people into the rental market. With the demand for rentals already at an all time high, speeding more people through the door only drives rental costs up further.
But don’t despair — there are effective strategies to manage these rising costs and keep your finances in check. Here are some top financial tips to help Melbourne renters beat the rate hikes and stay ahead.
- Negotiate Your Rent
It’s important to keep in mind that rent prices can occasionally be negotiated. The first step is to research the rental prices of similar properties in your area. If you find that you’re paying more than average, gather your evidence and kindly discuss it with your landlord.
Highlight your track record as a good tenant — paying rent on time, keeping the property in good condition and any other positive contributions. Landlords also often favour long-term tenants, so if you’re planning to stay for long, your landlord might be more open to negotiation. Another option is to propose signing a lengthier lease in return for a decreased monthly rate. This way your landlord will have the security of a guaranteed income over a longer period, which could very well be incentive enough to lower your rent.
And don’t be shy about asking for small concessions. If your landlord can’t adjust the rent, maybe they could pick up some of the utilities for you or add extras like a parking spot or internet instead. Every contribution counts and can accumulate over time.
- Take Out Rental Insurance
Renters insurance offers protection for your personal property in the event of theft, fire or natural disasters. It can even include liability coverage, leaving you protected if someone is injured in your home or if you accidentally damage the property.
Imagine how it would feel if your apartment got flooded because a pipe burst due to your own negligence and it affected not just your property, but the unit below as well. Without a renters insurance policy, any damage to your belongings and your neighbour’s property would be on you, including any medical bills if they were injured.
The good news is that renters insurance is usually fairly cheap, and can sometimes be as low as a few dollars per week. But having that peace of mind is priceless. Compare and choose among different providers for a policy. Ensure the policy you are looking for covers the replacement cost of your belongings (as opposed to actual cash value) so that you can replace your belongings at today’s prices without factoring in depreciation.
- Create and Stick to a Budget
While budgeting may appear to be a no-brainer, you would be surprised at the number of renters who have no idea how much they’re spending per month. Rent will eat up a large part of your budget, so you’ll want to be on top of tracking where every single dollar goes to avoid financial stress.
First make a list of all your sources of income. After that, go through all the fixed costs you have, like rent, utilities, transportation and so forth. Also, don’t forget to factor in your different variable costs like groceries, entertainment, and dining out. When you have a better idea of how and where your money is being used, you can start figuring out where you are able to cut back. That might look like eating out once a week rather than every other day, switching to a cheaper mobile plan, or cancelling subscriptions to services you barely use.
An easy guideline to follow is the 50/30/20 rule, which states that you should spend 50% of your paycheck on necessities (rent/utilities/groceries), 30% on discretionary expenses (eating out, shopping) and 20% into savings or paying off debt. This simple framework will help you manage your money better and ensure you’re putting enough aside for the future.
- Save On Utilities
Utility bills can skyrocket, especially in Melbourne during mind-numbingly chilly winters and scorching summers. Try to reduce these costs by developing energy-saving routines and ensuring your home is as energy efficient as you can make it. It can be as simple as turning off the lights before you leave a room, unplugging your electronics when you aren’t using them, and even changing those electricity sucking light bulbs to more energy efficient ones.
Save even more by investing in a programmable thermostat, which will control your heating and cooling systems when you’re away from home more effectively. This will enable you to alter the temperatures according to various times of day and not use energy when you’re not at home. Also, look for drafts around windows and doors. Use weather stripping or a draft stopper to keep in the heat during winter and the cool air during summer.
Another way to slash those utility bills by half is to make the switch to energy-efficient appliances. Whether that’s your toaster, kettle, microwave, or washing machine, the long-term savings on your utility bills can be substantial. Many utility companies also provide free or low-cost energy audits that involve an on-site expert reviewing your home and recommending a list of energy-saving measures unique to your home.
- Maximise Your Space
Living in a small rental is a blessing and a curse. Sure, you get to save on rent, but on the other side of things, it also requires creativity to make the most of your space. So, if you’re not looking to spend the big bucks on a larger rental, you’re going to have to be smart about maximising your space. And it all starts with decluttering. Decluttering and getting rid of the things that you no longer need is the first step. By doing so, not only will it free extra space but you can also make some additional cash online by selling your items on platforms like Facebook Marketplace.
Another great idea is to invest in multi-functional furniture – a sofa bed or dining table with storage underneath will help to make the most of your square footage. Use vertical storage solutions like wall mounted shelves and hooks to help keep clutter at bay so you can save as much of your floor space for ‘living uses’ as possible.
If you’re still struggling to cram all your items into a tiny rental, think about renting a storage unit to keep seasonal items and things you don’t use much. It’s usually cheaper than renting a larger apartment, and can help you live more comfortably.
- Share The Load
Sharing your space with someone is one of the most efficient ways to reduce rental expenses. Taking on a housemate means shared rent and utilities, which can do wonders for your bank account. Sure, it may not be for everyone, but if you’re open to the idea, it can be a great money-saving move.
But of course, you want to ensure that you still feel comfortable in your space, so choose your housemate wisely. Look for someone whose lifestyle and habits are compatible with yours and be sure to set clear expectations from the get go. Formalising it by way of a written agreement that sets out those terms is also a good idea, even if you’re keeping things informal.
Sharing your home can also open up social opportunities and make your living situation more enjoyable. Whether it’s splitting chores or having someone to share meals and experiences with, a good housemate can enhance your living experience while lightening your financial load.
- Stay Informed About Your Rights
As a renter, it’s important to stay informed about your rights. Understanding the legal aspects of renting can protect you from unfair practices and help you advocate for yourself more effectively. So, be sure to get familiar with the Residential Tenancies Act which regulates all rental arrangements in Victoria.
This law informs you about your rights when it comes to rent increases, repairs, returning your bond and getting evicted. Understanding what your rights are can give you the confidence to stand up for yourself if you think that your landlord or property manager is taking advantage of or discriminating against you.
Additionally, numerous organisations offer free advice and support for tenants, such as Tenants Victoria. These resources can help you navigate any disputes or issues that arise during your tenancy, ensuring you’re treated fairly and within the bounds of the law.
- Explore Government Assistance Programs
Finally, don’t forget to consider the opportunities provided by government assistance programs. There are several schemes available to help renters with their housing costs and improve their financial stability. One such example is the Commonwealth Rent Assistance program that is aimed at low-income renters who meet certain conditions.
Additionally, if you’re experiencing financial hardship, emergency relief services can offer support with essentials like food, utility bills, and rent payments. We all need a helping hand once in a while, so there’s absolutely no need to feel ashamed if you need help. Reach out, and take advantage of these resources to maintain your financial stability and well-being.
________________
Melbourne’s increasingly challenging rental landscape in a time of rising interest rates is no cakewalk, but the good news is that it’s not impossible to manage. By staying informed, proactive, and resourceful, you can mitigate the impact of these financial pressures.
So, remember these tips, stay flexible, and you will be in good standing to tackle any rental-related challenges that come your way. With a bit of planning and smart decision-making, you’ll be able to enjoy your rental without undue stress.
