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Change of Tenant Fees for Rentals. You might be eligible for a refund

By Morgan - 20 September 2012 7

I have been living in share houses for a few years now, with the regular comings and goings you accept of living in a large share house. Each time someone moved out and we informed the agent, apart from her chucking a song and dance about how we had broken our lease, she would always charge us a $100 fee for administration purposes. I always had a feeling this was a bit dodgy – but accepted it as a way to get her to go away.

Fast forward to today, someone complained about this agency to ACT Fair Trading and they are being forced to refund all these change of tenant admin fees going back at least 4 years. So I am getting a small cheque in the post. ACT Fair Trading called me and had been going through the Agents books for tenants affected. Turns out it is illegal under section 15 of the Tenancies Act to charge any fee other than Bond or Rent to a tenant. Anyone in a similar situation should contact them, I spoke to a very pleasant lady called Katrina.

RESIDENTIAL TENANCIES ACT 1997 – SECT 15

Rent or a bond only
(1) In consideration for giving a tenant a right to occupy premises, a lessor may only require or accept rent or a bond.

(2) A lessor must not require or accept any consideration for—

(a) agreeing to enter into, extend or renew a residential tenancy agreement; or

(b) agreeing to the assignment or transfer of a tenant’s rights and obligations under a residential tenancy agreement; or

(c) consenting to a tenant entering into, extending or renewing a residential tenancy agreement with a subtenant; or

(d) vacating premises; or

(e) giving a tenant a key to premises; or

(f) informing a tenant about the availability of premises for occupation under a residential tenancy agreement.

Link to Act

For an agency which prides itself on being “the best”, you’d think they’d know the law better than a bunch of Uni students. They were not a very nice agency, one of the main problems they had was that all their employees were Real Estate Agents, so they were starting from a very low base.

What’s Your opinion?


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7 Responses to
Change of Tenant Fees for Rentals. You might be eligible for a refund
Flossie 4:37 pm 20 Sep 12

So does this mean that a real estate agent who makes paying by direct deposit compulsory and then charges an admin fee for these transactions is breaking section 15?

Morgan 4:10 pm 20 Sep 12

Property Manager said :

What happened with the agency in question (as best I can understand what has been circulated by OFT to all agents) is that they were charging tenants a fee to effect a change of tenancy when it was subject to a periodic lease. This is where the clause of “tenants not to bear costs other than rent and bond” is applicable as the tenants were not breaking any contractual obligations as a result of this change.

Fixed Term = you pay
Periodic = you don’t pay

This may be the case.

My opinion of real estate agents has not been diminished by this experience, it could not get any lower.

dks00k 4:06 pm 20 Sep 12

Property Manager said :

Let me clarify this for everyone before you end up in a mis-informed meltdown…

Nice clarification. Thanks.

YeahBuddy 3:41 pm 20 Sep 12

My old Property Manager only required me to send an email advising that I was leaving the property and the lease didn’t have to be changed at all.

Maybe that was illegal …. or maybe he was nice. Who knows?

Property Manager 3:30 pm 20 Sep 12

Let me clarify this for everyone before you end up in a mis-informed meltdown…

The first thing to understand is that a Tenancy Agreement (residential lease) is a legal contract. Once the terms of this contract are agreed to, neither party can make changes to the existing agreement. For any change to be made, the parties must agree to a new contract that will supersede the existing one.

The other thing you need to know is the difference between a FIXED TERM TENANCY and a PERIODIC TENANCY. A fixed term is, as the name suggests, an agreement between the owner and the tenant for a specific period of time. This means that if a tenant wants to terminate the tenancy before the end of that period they are contradicting the terms of the contractual arrangement, or, as is the common term, breaking their lease.

A periodic tenancy offers all the same rights and responsibilities except that no party is bound by specific dates. This means that the tenants can end the lease by giving three weeks notice, without any penalty.

The Residential Tenancies Act stipulates quite clearly that if a tenant breaks their lease during a fixed term the owner is entitled to recover costs (for advertising and administration) that would otherwise have been avoided (up to a limit equal to one week’s rent). This means that any advertising or agent fees the owner would not have had to pay if you weren’t breaking your lease are to be reimbursed by the tenants. See sections 62 and 84 of the Residential Tenancies Act.

In the instance that tenants “simply want to swap names on the lease”, you are actually seeking to end the current tenancy (contract) and supersede it with a new agreement under new conditions. If this occurs during a fixed term tenancy you would be liable to reimburse any administration fee that the owner would incur for this to be processed – you are breaking the original lease to effect this change, so you have to reimburse costs the owner would have avoided if you weren’t doing so.

What happened with the agency in question (as best I can understand what has been circulated by OFT to all agents) is that they were charging tenants a fee to effect a change of tenancy when it was subject to a periodic lease. This is where the clause of “tenants not to bear costs other than rent and bond” is applicable as the tenants were not breaking any contractual obligations as a result of this change.

Fixed Term = you pay
Periodic = you don’t pay

DrKoresh 1:36 pm 20 Sep 12

Good on you, I’d recommend chasing up all the money they’ve bilked you for over the past 4 years, and be wary of them trying to short-change you.

dks00k 1:26 pm 20 Sep 12

Hang on….

Does that mean its illegal to charge that ridiculous lease preparation fee???

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