Taking that big leap to move into a rental property for the first time can come with its own challenges, especially considering a first-time renter will have no rental history.
So, why is it that having no rental history could cause difficulties securing a property? Landlords and property managers alike utilise a potential tenants' rental history to determine if the tenant can be trusted to live in the property.
This can be bothersome especially since other potential tenants could wield a rental history that gives them the edge over first-time renters when applying for a rental application.
However, it's not all doom and gloom for individuals with no rental history, as there are plenty of ways a future tenant can prove that they're reliable when it comes to living in a rental home.
Providing Payment History
Convincing a property manager to allow you to live in their property involves proof that you're reliable and you're able to not damage the premises, as well as consistently pay your rental payments on time.
A common way to prove the latter is to showcase that you have good financials and a potential credit check. Since there is no prior rental history, payment history is the next best thing, as it proves you are reliable with on-time payments and there is a consistency to your financial habits.
This proof can be provided by printing out bank statements that showcase regular payments, whether they be mobile plans, streaming service payments, mortgage, or car loans that you have been able to keep on top of.
For first-time renters, income is a big one, as it ties into the aforementioned reliability that steady payments provide.
The best way to provide a potential landlord is to contact your employer for a letter of rental reference. A rental reference letter is a document/written declaration (usually one page) to a potential landlord from a previous landlord or property manager that includes important information about you as a potential tenant.
This reference should provide as proof of income, providing your salary and payslips, your time working under this employer and hopefully a good word put on to show that you're a trusted individual.
Consider your income payments before applying for your first rental, as the rent you're aiming for should serve as less than 30% of your payment. So, your income should marry up with your week's or months' rent nicely for a stronger consideration by the landlord for a rental lease.
For more details about providing good references and preparing a rental reference letter, check out our blog here.
Speaking of character references, one of the best ways to detail your trustworthiness is through the mouth of another, which we call a guarantor.
A guarantor is somebody that can back you up and support your application, stating that they'll vouch for your payments should you fail to meet them (which hopefully won't come to that if you want to stay in good favour of your personal reference).
This option is great for first-time renters of the younger variety, as this role will often fall to parents or another family member. Providing a guarantor allows the property owner to feel a bit more comfortable acknowledging there's another party in favour of the prospective tenant, both for character reference and possible repercussions down the line.
Be wary of the choice of a guarantor, however, as an early missed payment could cause some issues between yourself and your guarantor, so try to steer clear of your co-workers or close friends that you could tarnish a relationship with.
Direct Debit Payment
In most instances, real estate agents will insist that a direct debit payment is set up for the rent during the tenancy.
This automatic payment allows the payment consistency to aid as a trust that your payments will be on time.
If you haven't been inclined to provide a direct debit payment, it's not a bad idea to set one up yourself, as it's a great way to show your potential landlord that you can be trusted as a great tenant (which isn't always the case in a heavy rental market!)
In the case of income payments coming from Centrelink, you're also able to use their Centrepay payment system to automate payments.
In summary, while a potential tenants' rental history is excellent to have to land a tenancy agreement, it's not the whole of the story.
Landlords, at the end of the day, are just after good tenants who will respect the property and provide consistent payments, so if you can convey that you're an individual of that calibre, then you'll be able to sign on the dotted line in no time!