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April 15, 2019

Rent in Advance: Everything You Need to Know About What Paying ‘Rent in Advance’ Means

“Where did my first two weeks’ rent in advance go?”

It’s one of the most common questions tenants ask of Perth Property Managers at the end of a tenancy, but rarely do the common answers online make the concept of rent in advance easy to understand.

It is important to note that the rent payment for your first two weeks of tenancy as rent must be paid prior, or in advance, to the period a tenant is paying for. Some tenants mistakenly believe that the first two weeks’ rent paid is held in trust for use at the end of tenancy, like a bond, but this is not the case.

Let’s describe the concept of rent in advance in a way that is easier to understand.

What is a rent payment?

In the context of the property rental market, a rent payment refers to the amount of money that a tenant pays to their landlord or property management provider in exchange for the right to live in a property.

Rent payments are usually made periodically on a weekly, fortnightly, or monthly basis depending on the rental agreement between the tenant and the landlord.

Typically, rent payments are paid in advance, meaning that the tenant pays for the upcoming rental period, rather than in arrears for the period they have already occupied the property.

What is ‘rent in advance’?

The best way to illustrate this is a simple example of shopping. Suppose you go into a shop and select a can of drink from the fridge. If you open the can, drink the contents and then walk to the counter to pay, you would agree you might find the store owner displeased with your actions!

The right thing is to pay for the drink first, and then consume the contents after payment.

Rent in advance works exactly the same way.

You purchase the time period in advance, and then consume the time period by residing in the property.

Once the time period is finished or consumed, you then pay for the next time period again before using it, by continuing in the lease and residing in the property.

Why do tenants pay two weeks in advance?

Landlords request payment in advance from their tenants to provide a buffer in case of any unexpected overheads or damages that may occur. This also provides consistent cash flow for the landlord to maintain the property and handle their taxes. On top of that, paying rent in advance establishes trust between the landlord and the tenant and can be seen as a sign of good faith on the part of the tenant.

The amount of rent in advance requested varies depending on the terms of the lease agreement and the payment frequency agreed upon. For example, if the tenant pays rent on a weekly or fortnightly basis, the landlord may ask for two weeks’ worth of rent to be paid upfront as rent in advance.

However, it is important to note that the amount of rent in advance requested by the landlord should not exceed the amount of rent due for a month.

How often should a tenant pay rent?

The frequency of rent payment varies depending on the rental agreement between the tenant and the landlord. Generally speaking, rent is paid on a weekly, fortnightly, or monthly basis.

How are rent payments collected by a property manager?

Property managers collect rent payments in several ways, depending on the agreement with the landlord and the preference of the tenant.

Generally speaking, the property manager is required to provide the tenant with at least one payment method that doesn’t include any additional fees, other than the tenant’s own bank fees, of course. Moreover, the rent provider must also give the tenant the option to pay through the Commonwealth Centrepay bill-paying service.

Some common rent payment methods include:

In-person payments

The tenant may pay rent in person by visiting the property manager’s office and making a cash, check, or money order payment.

Automatic debit payments

The tenant may set up automatic payments, where the rent is debited from their bank account on a regular basis. This is a convenient option for tenants who prefer not to worry about remembering to make payments.

Electronic rent payment services

Many property managers utilise online rental platforms that enable them to accept rent payments through a secure online payment portal.

What records are kept for rent payments?

Landlords and property managers are required to keep records (also called ledgers) of rent payments for a minimum of 12 months. The records should include details such as the date of the payment, the amount paid, the period the payment covers, and the name of the tenant.

Additionally, the rental provider must also issue a rent receipt to the tenant immediately if the rent is paid in person or within five business days of a request. The rent receipt should include the date of the payment, the amount paid, and the period of the tenancy the payment covers.

What bills aren’t included in rent when renting in Western Australia?

Water, gas or electricity charges aren’t included in WA rent payments. The specified rental agreement describes the separate metered electric service, gas service and water services on the rental property.

What are the laws related to collecting rent in advance in Western Australia?

In Western Australia, landlords can request two (2) weeks’ rent in advance, but cannot ask for more than one (1) month’s rent in advance unless the tenant specifically asks to do so. They also must provide payment receipts.

If you would like more information about the laws relating to rent in advance in Western Australia, please refer to the Rent in Advance Guidelines.

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