Why monthly rent is not weekly rent times four

Advertised by the week, collected by the month

Australia is unusual in advertising residential rent weekly. Listings, rental appraisals, bond amounts and conversations with agents are all conducted in dollars per week, which makes properties easy to compare and makes the number look smaller than the equivalent figure in a country that quotes monthly rent.

Collection is a separate question. Many managing agents run their trust accounting on a calendar-monthly cycle, so the rent is advertised at $650 a week and then debited once a month. A tenant who signs a lease at a weekly figure and then sees a monthly amount on the ledger has to reconcile the two, and the reconciliation is where the mistake happens: the monthly amount looks too high, so the tenant assumes an error.

There is no error. The monthly amount is the annualised weekly rent, and the intuition that a month is four weeks is what is wrong.

The conversion, and the four weeks that go missing

A year contains 52 weeks and 12 months. Dividing one by the other gives 4.3333 weeks in an average month, not 4. The correct route between any two rent frequencies is always through the annual figure.

Annual   = weekly × 52
Monthly  = weekly × 52 ÷ 12   = weekly × 4.3333…
Weekly   = monthly × 12 ÷ 52
Daily    = weekly ÷ 7

$650 a week:
  Annual  = 650 × 52 = $33,800.00
  Monthly = 33,800 ÷ 12 = $2,816.67
  Wrong   = 650 × 4 = $2,600.00

The size of the error is fixed and it does not depend on the rent. Twelve months of “weekly × 4” pays for 48 weeks, and a year is 52 weeks long, so the shortcut always leaves exactly four weeks of rent unfunded. Expressed as a percentage it can be quoted two ways, and both are worth knowing: the correct monthly figure is 8.33% higher than the times-four figure (52 ÷ 48 = 1.0833), while the times-four figure is 7.69% below the amount you actually owe.

Look down the last two columns. They are identical, and they are identical for every rent in the table, because four weeks of rent is what the shortcut omits and four weeks of rent is what the naive monthly figure happens to be. That coincidence is a useful check: if your annual shortfall does not equal your times-four monthly figure, one of the two numbers is wrong.

A year is not exactly 52 weeks either

For completeness: 52 weeks is 364 days, and a year averages 365.25 days once leap years are included. The true figure is 365.25 ÷ 7 = 52.1786 weeks. Using it, $650 a week annualises to $33,916 rather than $33,800, and the monthly figure becomes $2,826.34 instead of $2,816.67 — about $10 a month apart.

Australian residential practice ignores this and uses a flat 52 weeks, and you should too. The point of the conversion is to match the ledger the agent is keeping, and if you compute a more mathematically pure figure you will simply disagree with them by ten dollars every month. Where the extra days do reappear is in agents who charge a daily rate: annual rent divided by 365, multiplied by the number of days in the month. That method makes February cheaper than January and still collects 52 weeks over the year. It is worth asking which convention your agent uses before you set up an automatic transfer, because a fixed transfer against a variable charge slowly accumulates arrears or credit.

What you pay before you get the keys

The weekly figure also governs the upfront costs, because both the bond and the rent in advance are conventionally expressed in weeks of rent rather than dollars. That makes them easy to underestimate: they scale with the rent, and they land in the same fortnight as moving costs.

• Bonds are lodged with a state or territory bond authority in most jurisdictions, not held by the agent.
• Rent in advance means the first period is paid before occupation, so the second payment falls due sooner than a full month after moving in.
• Water usage, and sometimes a fixed water or utility charge, may be separately payable depending on the tenancy and the metering arrangement.
• None of these are included in an advertised weekly rent, and none of them appear in a weekly-to-monthly conversion.

The 30% rule of thumb, and the three things it does not know

Rent above about 30% of gross household income is the conventional marker for housing stress, and it is a reasonable first filter. On $90,000 gross it works out at $27,000 a year, $2,250 a month, or about $519 a week. On $110,000 it is $33,000 a year, or about $635 a week.

It is a guideline rather than a rule, and it has three real weaknesses. First, it uses income before tax, while rent is paid out of income after tax — a budget built on gross income overstates what you can afford, sometimes badly. Second, it takes no account of household size or composition: 30% for a single person and 30% for a family of four leave very different amounts of money for everything else. Third, it ignores the rest of the cost of living where you are renting, and a cheaper property with a long commute can cost more in total than a dearer one without.

The more useful exercise is the one Moneysmart sets out in how to do a budget: start from what actually lands in your account, subtract the commitments you cannot move, and see what is left. Use the 30% figure to decide whether a property is worth a closer look, not to decide whether you can afford it.

Increases and notice are state law, not national law

Everything above is arithmetic and applies everywhere in Australia. The rules about rent increases are not arithmetic, and they are not national. Residential tenancies are governed by state and territory legislation, so how often rent can be raised, how much notice must be given, what form that notice must take, and how a tenant can challenge an increase as excessive all depend on where the property is.

That is why this guide cites three separate authorities rather than one: NSW Fair Trading for New South Wales, Consumer Affairs Victoria for Victoria, and the Queensland Government for Queensland. There is no equivalent Commonwealth page, because there is no Commonwealth residential tenancies law. If you are in another state or territory, the relevant consumer affairs or fair trading body is the place to look, and any website that states a single national notice period for the whole country is simplifying something that cannot be simplified.

What you can do arithmetically is size the increase. A rise from $650 to $682.50 a week is 5%, which is $32.50 a week, $140.83 a month, and $1,690 a year. Converting to an annual figure before you respond is worth the thirty seconds, because a change that reads as small per week is rarely small per year.

What the OzCalc rent calculators do and do not model

The rent converter annualises whatever frequency you enter on a 52-week year and divides that annual figure into the other periods, which keeps every output internally consistent. It does not use the 52.1786-week year and it does not model a daily-rate agent, for the reason given above: matching Australian leasing convention is more useful than matching the calendar.

• The converter handles rent only. Bond, rent in advance, water, strata and contents insurance are all outside it.
• The rent affordability calculator compares annualised rent to annualised gross income, using the same 52 ÷ 12 convention on both sides. It does not deduct tax, and it does not know about Commonwealth Rent Assistance, housemates splitting the rent, or any other income support.
• The rent increase calculator applies a percentage and annualises the difference. It performs no legal test at all — it cannot tell you whether an increase is permitted, correctly notified or excessive, because those questions are answered by your state or territory legislation.
• No calculator here forecasts market rents. Every figure is a conversion of a number you supply.

If a figure from the converter disagrees with your agent by a few dollars, the likely causes are in that order: a daily-rate charging method, a 52.18-week year, or rounding on a part-month at the start of the tenancy. If it disagrees by hundreds, someone has multiplied by four.

Common questions