Congratulations, you've managed to find the perfect home for rent which is nothing but great news! However, before you put down a security deposit on your dream rental property, it's important to understand the affordability and rent amount first.
If you’re a first-time renter, you may be left feeling confused about how your monthly rent is calculated. You might be happy to learn, you’re not alone! It’s one of the most commonly asked questions by first-time renters.
In Australia, there is no formula in the legislation on how to calculate rent, and a number of different formulas are used by Property Managers, Leasing Consultants, Landlords and Renters- all yielding the same (and correct) rental amount.
You will need to determine the monthly rental amount, so you can budget and accurately set aside your income for rent. A slight miscalculation can have a significant impact on your monthly rent repayments, and you certainly don’t want to fall in arrears or apply for a property you can’t afford (a renter's nightmare). To assess the affordability of the leased property, it’s important that you understand how rent is calculated before the ‘For Rent’ sign is taken down and you sign the tenancy agreement.
In this article, we hope to explain how monthly rent is calculated and provide you with a quick and easy to use rent calculator formula to help prepare your (correct) budget in time for your move.
How is monthly rent calculated?
Rent is typically quoted per the weekly rate, and payments are made per calendar month. The most common mistake people make is to assume that there are 4 weeks in a month. As you may have already discovered, multiplying your weekly rent by 4 does not equal the monthly rent owed. Why? The answer is simple, not every month has an equal number of days. Which means that calculating your monthly rent is not as straightforward as multiplying the weekly rent by 4 (and don't forget leap years).
To calculate your monthly rent repayment, use this simple formula to convert weekly rent into the monthly rent payment.
- Step 1: Weekly Rent ÷ 7 = Daily Rent amount
- Step 2: Daily Rent x 365 = Yearly Rent amount
- Step 3: Yearly Rent ÷ 12 = Monthly rent amount
For example, if the rent is quoted as being $300 per week, we would plug 300 into the formula to get the monthly rent amount (step 3) below.
- Step 1: 300 ÷ 7 = 42.85
- Step 2: 42.85 x 365 = 15, 642.85
- Step 3: 15, 642.85 ÷ 12 = 1,303.57
If the weekly rent rate is $300, the monthly rent repayment would total $1,303.57.
Or, you can use our online monthly rent calculator below!
A quick disclaimer: We give no warranties on rent calculations or monthly rent repayments. If you have any further questions about leasing a rental property, make sure you contact your real estate agent or property manager. They will explain your month's rent, security deposit, upfront costs, rental period, and any other tenancy or leasing concerns you may have!
If you’ve found your dream rental property and are now preparing to move, we can organise your utilities (for free) in a quick call! Simply let us know here, and make sure to check out our moving checklist to make sure you’re on track for your move!