How to Prepare a Private Rental Agreement

Renting out your property privately is an exciting venture! You’ve done the preparation, found a tenant, and best of all—you’re about to save a significant amount of money by handling everything yourself. But before the lease officially starts, there are a few crucial steps to take, one of which is creating your private rental agreement.

This task might seem daunting, but we’re here to simplify the process for you in this blog. Think of it as following a recipe!

1. Use a State-Specific Template

Every private rental agreement must comply with the legal requirements set out by your state government. Typically, these agreements don’t differ much from those used by real estate agents. By examining an example contract, you’ll get a good sense of how yours should look.

However, since these requirements can vary slightly between states and territories, a quick Google search will help you find the right template. You can also check the state-by-state guides at the footer of this page for detailed information on renting privately in your area.

2. Understand What to Include and Exclude in the Contract

It’s natural to feel overwhelmed when drafting a tenancy contract, given your vested interest in protecting your property. Fortunately, some terms are automatically included, so you won’t need to explicitly state them.

What NOT to Include: Certain terms, known as implied terms, are automatically included in any rental agreement. These cover:

• The landlord will handle basic repairs as needed.

• The tenant must provide access for repairs.

• The tenant will respect the property and use appliances appropriately.

• The tenant won’t be disturbed unnecessarily by the landlord.

These are protected under Australian tenancy laws, so there’s no need to include them in your agreement.

What to Include: Here are the key points you should explicitly state in your contract:

• Agreed rental price and payment method

• Terms on how and when rent increases will occur

• Lease duration

• Bond amount and its storage method

• Any special agreements (e.g., pet policies)

For a comprehensive list of express terms specific to Victoria, click here. Remember, these terms can differ across Australia, so check your state’s requirements.

3. Choose the Type of Lease – Fixed or Periodic

The type of lease you select should align with your plans for the property. Here’s a quick rundown:

Fixed-Term Tenancies:

• These last for a set period (e.g., one year). After this period, you and your tenant can renew for another fixed term, or it will default to a periodic agreement.

• Fixed-term agreements stipulate when rent can be increased, typically every six months, but it can vary, so seek advice before deciding.

• These agreements provide guaranteed income but can only be ended with the renter’s consent unless lease terms are breached.

Periodic Tenancies:

• These are month-to-month agreements with a specified end date in writing.

• Landlords generally need to give more notice than tenants to end the agreement, varying by state.

• Periodic tenancies offer flexibility, allowing you to ask tenants to leave at any time, provided you follow state notice requirements. Ideal if you plan to renovate, move in, or sell soon.

Summary: Periodic tenancies provide flexibility for moving out tenants when needed, while fixed-term tenancies offer financial security over the lease term, allowing for a firm budget.

4. Review and Sign Your Private Rental Agreement

Remember, a private rental agreement is legally binding, so ensure it reads professionally and is well-presented. Focus on spelling, grammar, and formatting.

Take a break and review your agreement with fresh eyes after a day or two, or better yet, have someone else check it for errors.

Finally, read through the content to confirm all necessary express terms are included. Your agreement covers implied terms automatically, but any omitted express terms won’t be protected.

Sign and date the agreement before sending it to your new tenant, ensuring they know to ask any questions before signing. They must return their signed copy to you before you hand over the keys.