Collecting Rent in Advance
Find out everything you need to know about collecting rent in advance from your tenant.
Understanding your responsibilities when it comes to collecting 'Rent in advance' from your tenant.
As a landlord, it's important to understand your rights and obligations when it comes to collecting rent from your tenant.
In Australia, rent is typically paid on a weekly or fortnightly basis, and in some cases, you may ask for the rent to be paid ‘in advance’.
The concept of ‘rent in advance’ can be a little confusing and may raise a few questions from your tenant, so let's take a look at what it means in the different states of Australia.
What is Rent in Advance?
At the start of a tenancy usually, a tenant pays their bond plus 2 weeks’ rent ‘in advance’. Rent in advance is simply the first payment of the rental period.
The tenant is paying for the time period in advance and then they are consuming the time period by living in the property. Once the time period is finished or consumed, the tenant will then pay for the next time period again before using it, by continuing on the lease and living in the property.
It’s a common misconception is that the rent “in advance” that is paid at the beginning of a tenancy can be held and used for the last two week’s rent of the lease.
Rent in advance is referred to as such because it is usually paid before it is due. Rent in advance is not a payment on top of a normal rent payment.
What are the laws about collecting ‘Rent in Advance’ across the states in Australia?
NSW
In New South Wales, a landlord is entitled to request rent to be paid two weeks in advance. However, this must be specified in the tenancy agreement, and the landlord cannot request more than two weeks' rent in advance at any time.
This means that you cannot ask for further rent payments until all paid rent has been used.
An example from NSW Fair Trading:
- The tenancy agreement begins on 1 November. A tenant pays 4 weeks' rent as a bond and 2 weeks' rent in advance.
- The 2 weeks rent in advance pays for the 1 – 14 November. The tenant does not have to pay rent again until 15 November.
- On that date, the tenant will need to pay another 2 weeks' rent in advance for the 15 – 28 November.
VIC
In Victoria, a rental provider can ask for rent to be paid in advance, but it is limited to one month in advance. According to Consumer Affairs, a rental provider can ask for a maximum of one month’s rent in advance, unless:
- The rent is paid weekly, in which case they can only ask for 14 days’ rent in advance
- In cases where the rent exceeds $900 a week, there are no limits up to the full rental value.
For more information see Consumer Affairs Victoria.
QLD
In Queensland, a landlord can ask for rent to be paid in advance, but the amount is limited to two weeks' rent for periodic agreements or one month for fixed-term agreements.
A tenant cannot be asked to make another rent payment until the ‘rent in advance’ has been used up.
An example from the Residential Tenancies Authority:
- The agreement states the tenant must pay rent of $400 a fortnight.
- Before they move in they pay $400 ‘rent in advance’.
- The tenant moves into the property and lives there for 2 weeks.
- At the end of that 2 weeks, their next $400 rent payment is due - The ‘rent in advance’ has been used up.
SA
In South Australia, a landlord can ask for rent to be paid in advance, but the amount is limited to two weeks’ rent.
This means that monthly rent payments can't be taken until the first two weeks' rent has been used up and the next rent is due. The tenant must also be given a receipt for any rent paid.
For more information see SA Government.
WA
In Western Australia, a landlord can ask for rent to be paid in advance, but the amount is limited to two weeks' rent.
The tenant must be given a receipt for any rent paid in advance, and the landlord must not request more than one month's rent in advance unless the tenant specifically asks to do this.
For more information, see Commerce WA.
ACT
In the Australian Capital Territory, a landlord can ask for rent to be paid in advance, but the amount is limited to two weeks' rent unless the tenant decides to pay more, for example, to align with their monthly pay cycle.
For more information, see ACT Government.
NT
In the Northern Territory, a landlord cannot require a tenant to pay rent in advance of more than one rental period. If a landlord does not comply with these requirements penalties may apply.
For more information see Consumer Affairs NT.
TAS
In Tasmania, a landlord can only ask for the first payment period which is usually two weeks’ rent if the rent is paid fortnightly.
For more information see Consumer Building and Occupational Services TAS.
Track your Rental Payments and Receipts through RentBetter.
It's important to know your responsibilities when it comes to rental payments and to be aware that the rules regarding rent in advance can vary from state to state.
If you’re asking your tenant to pay rent in advance, make sure you understand the rules in your state, and always give out a receipt for the payment of rent. And most importantly, make sure that the agreement is written and both parties have a copy.
RentBetter is the perfect tool to use to help ensure you stay on track with your rental payments and ensure that you’re complying with the law for your state. The platform enables you to onboard your tenant and set them up with automatic rental payments so you don’t miss a beat and ensure you get paid on time, every time.
Tenants can pay rent using a credit card or their bank account. The system will ensure payments run on schedule as per your lease agreement. All payments are tracked, the ledger is automatically updated, and receipts are sent to you and your tenant.
There is always a record of what's happening and it’s easy to access so you don’t need to go trawling through bank statements to find out where you stand.
RentBetter will also send automatic alerts and notifications to both you and your tenant. It’s peace of mind to ensure nothing is missed and all payments are received on time.
If you’d like to find out more about how Rental Payments work, just click here or register for a demo of the platform below.
