This article is general information only and does not constitute financial or tax advice. Consult a qualified tax professional for advice specific to your situation.
Key takeaways
- Set your rent based on comparable listings in your suburb, not your mortgage repayments.
- Three weeks of vacancy on a $500/week property costs $1,500 in lost rent, plus ongoing holding costs, making overpricing more expensive than it appears.
- Gross rental yields of 3 to 4 per cent are typical in Sydney and Melbourne, while Brisbane, Adelaide, and Perth can offer 5 to 6 per cent or higher.
- Accepting pets, good property condition, and desirable features like air conditioning and a garage push your rent toward the top of the local range.
- Rental demand peaks in January and February, so timing lease renewals for stronger months helps you secure better tenants at market rates.
Choosing a rent price feels like guessing in the dark if you don't have a process. Set it too high and the property sits empty for weeks. Set it too low and you're subsidising your tenant's lifestyle for the entire lease term. Getting it right from the start, and knowing when to adjust, is one of the most financially meaningful decisions you'll make as a landlord.
Start With the Market, Not Your Mortgage
Your mortgage repayments have nothing to do with what the market will pay. Rent is set by what comparable properties in the same suburb are fetching right now, and that's where your research has to start.
The two main places to look are realestate.com.au and domain.com.au. Search for rentals in your suburb that match your property type (three-bedroom house, two-bedroom unit, and so on) and filter by recently listed. Pay attention to properties that have been on the market for more than two or three weeks, because those are often overpriced. The ones that disappear quickly are more useful as a reference point.
Look at five to ten comparable listings and get a feel for the realistic range. A property priced at the top of that range needs to justify it. One priced at the bottom should rent quickly.
Calculate Your Gross Rental Yield
Once you have a likely rent figure, it's worth checking it against your purchase price to understand the return you're getting. The calculation is straightforward:
Gross rental yield = (Annual rent / Property value) x 100
Say your property in Adelaide is worth $620,000 and you're thinking of pricing it at $530 per week. That's $27,560 a year. Divided by $620,000, multiplied by 100, you get a gross yield of about 4.4%.
Whether that's good depends on the city and the suburb. Yields in Sydney and Melbourne tend to run lower (often 3–4%) because prices are high relative to rents. Regional areas and cities like Adelaide, Brisbane, and Perth can offer 5–6% or higher. Gross yield is a useful comparison tool, but it doesn't account for expenses. Your actual cash position is your net yield after you subtract the costs of holding the property. Use our rental yield calculator to check both numbers.
What Affects Your Price Beyond the Suburb
Location accounts for most of the number, but within any suburb there's still a range. The factors that push a property toward the top of that range:
Condition. A fresh coat of paint, clean carpets, and working appliances will outperform a tired property every time. Tenants compare photos before they book an inspection, and a well-presented property rents faster at a higher price.
Features. Air conditioning, a dishwasher, a covered car space, and outdoor living areas all add value in a tenant's mind. A garage in a suburb with street parking pressure is worth real money. A second bathroom in a share-house market can push you meaningfully higher.
Pets. Refusing pets puts you in direct competition with every other pet-free listing. Accepting pets (with appropriate bond conditions where your state allows) opens your property to a pool of tenants who are often desperate and willing to pay a premium for the privilege. The risk of pet damage is real but manageable; the risk of a long vacancy often isn't.
The Vacancy Cost of Overpricing
This is where landlords most often get it wrong. An extra $30 a week sounds appealing, but not when the property sits empty for three weeks longer than it should.
Three weeks of vacancy on a property renting at $500 per week is $1,500 in lost rent. That $30-per-week premium takes nearly a full year to recover. And vacancy costs more than just the missing rent. You're still paying mortgage interest, council rates, and insurance while the property sits empty.
The right price is the one that attracts a good tenant quickly, not the highest number you can write on a listing.
Find Your Break-Even Rent
Before you set a price, it helps to know the floor: the minimum weekly rent that covers your holding costs. Enter your mortgage repayments, rates, insurance, and other expenses below to see where that line sits for your property.
Enter your mortgage repayment to calculate break-even rent.
If your target rent is well above the break-even number, you have a healthy buffer against vacancy. If it's close, a few empty weeks will push you into negative territory. Either way, knowing the number puts you in a stronger position when you're weighing up a competitive price versus a hopeful one.
When to Increase Rent
Most landlords raise rent too rarely or not at all. Rents in most Australian markets have risen materially over the past several years, and if you haven't reviewed your rent in 12 to 18 months, there's a real chance you're behind the market.
A reasonable rent review point is when a lease comes up for renewal. You have a natural moment to compare your current rent against the market, give proper notice if you're increasing it (typically 60 days in most states), and make the adjustment without disrupting a good tenancy relationship. A modest increase of 3–5% is usually well-received if the tenant values the property and you've been a responsive landlord. A sudden jump to market rate after years of no movement is more likely to push them out.
Read our guide to managing tenants and leases in Australia for the state-by-state rules on notice periods and frequency limits. You can also use the rent increase calculator to see how a proposed increase compares to CPI and what notice your state requires.
Seasonal Demand Patterns
Demand for rental properties in Australia follows a fairly predictable seasonal pattern, though it varies somewhat by market. The busiest rental periods tend to cluster around January and February, when people moving for work or study are settling into cities before the year gets underway. The end of the calendar year (October to December) is also active in most markets.
If your property becomes available in the middle of winter, you may be competing for a smaller pool of prospective tenants. That's worth factoring into your expectations when pricing, and it's a good reason to time lease renewals for the stronger months where possible.
Know Your Actual Yield, Not Just Your Listed Price
Setting rent at the right level is only the first part of understanding whether your property is actually working for you. Your gross yield tells you how the rent compares to the purchase price. But your real financial position is rent minus expenses, and that number is often different from what landlords expect. Try the cash flow calculator to model your full picture, including mortgage costs, rates, and management fees.
propkt tracks your income and expenses property by property, so you can see exactly what each one is earning and costing you across the Australian financial year. If you've just reviewed your rent, you can see the impact in real numbers rather than guessing. And when tax time comes, you've already got everything sorted rather than scrambling through a year's worth of bank statements.
As always, speak with your accountant about how your rental income and expenses interact with your broader tax situation. propkt gives you the records, but your accountant gives you the strategy.
Want to know if your rent is actually covering your costs? Start tracking your rental income and expenses with propkt, free for your first property.