I have an IP that is about to have the current tenants renew their lease for a further 12 months.The agency is saying that they will charge a weeks rent and another processing fee. I can understand paying a weeks rent for finding new tenants but is it normal to pay a weeks rent to get the current tenants to sign a new lease?. Sounds like a lot of money for very little work,on top of all other fee's they charge.
rent renewal fee's???
- Thread starter shanematt
- Start date
The ones that I have don't charge a week. Most charge $30. Some the tenants pays half.
I think it's ridiculous for them to charge that. Check the contract but I'd still question them. Ask them how much notice you have to give to change property managers and let them know it is not acceptable.
Maybe yo can negotiate, otherwise change PM's. You don't want to be paying that every time a tenant renews. That's losing a week every year. Don't know what the rent is but even if it's $200 it adds up.
I think it's ridiculous for them to charge that. Check the contract but I'd still question them. Ask them how much notice you have to give to change property managers and let them know it is not acceptable.
Maybe yo can negotiate, otherwise change PM's. You don't want to be paying that every time a tenant renews. That's losing a week every year. Don't know what the rent is but even if it's $200 it adds up.
If the tenant has to pay half of the renewal fee ($15), does the tenant pay anything for the initial lease?
I was reading my contract (I have not yet signed) as I have a few questions. This being one of them.
I noticed in the early part of the contract it says 1 weeks rent with all renewals and at the rear of the contract in the list of fees etc it says $30.00 for renewals.
I want to confirm that the 1 weeks rent is for "new tenants only" and if its the same tenant only the $30.00 is payable not 1 weeks rent plus $30.00
There are a few other things I have marked to be confirmed.
A necessary evil contracts.
Brian
I noticed in the early part of the contract it says 1 weeks rent with all renewals and at the rear of the contract in the list of fees etc it says $30.00 for renewals.
I want to confirm that the 1 weeks rent is for "new tenants only" and if its the same tenant only the $30.00 is payable not 1 weeks rent plus $30.00
There are a few other things I have marked to be confirmed.
A necessary evil contracts.
Brian
Standard REINSW agreement states- (agent inserts where brackets are)
The agent shall be entitled to the following fees:-
a) (110% of first weeks rent- ie 1 week + GST).
as a letting fee upon effecting any letting of the premises.
b) ($33- $15 refunded by the tenant) as a tenancy Agreement preparation fee.
And management (%fee and admin etc.)
So for a new rental 110% of first week. To renew $33 only (tenant pays $15 of that).
Not sure how other states are worded.
The agent shall be entitled to the following fees:-
a) (110% of first weeks rent- ie 1 week + GST).
as a letting fee upon effecting any letting of the premises.
b) ($33- $15 refunded by the tenant) as a tenancy Agreement preparation fee.
And management (%fee and admin etc.)
So for a new rental 110% of first week. To renew $33 only (tenant pays $15 of that).
Not sure how other states are worded.
Simple answer.
Let the tenant go periodic give the PM the required notice and find a new PM who doesn't charge a weeks rent on renewal.
Once with new PM get the new PM to put the tenant back on a lease.
Cheers
PS if you are looking for a PM in Sydney (city) then you can try Kho and Lee, speak to Tom Lee and I am sure he will look after you. Their number is 9566 1566
Let the tenant go periodic give the PM the required notice and find a new PM who doesn't charge a weeks rent on renewal.
Once with new PM get the new PM to put the tenant back on a lease.
Cheers
PS if you are looking for a PM in Sydney (city) then you can try Kho and Lee, speak to Tom Lee and I am sure he will look after you. Their number is 9566 1566
I find it amazing that tenants are effectively being charged a fee to renew their lease.
I haven't heard of anyone doing that here, and I doubt we would be allowed to. We can't legally pass on the fee charged by Centrelink if they are processing payments for the tenants and from memory I seem to recall that we can't legally ask the tenants to use any method of payment that would mean they would incur a fee. So ... I imagine if our RE started charging us for renewing a lease we would have to wear the entire fee, or find another RE.
Quick update from my initial question on this post
Good news. The egency have agreed to waive the weeks fee for the lease renewal and just charge $18- for lease prep. I appreciate their understanding of my concern.
Good news. The egency have agreed to waive the weeks fee for the lease renewal and just charge $18- for lease prep. I appreciate their understanding of my concern.
That mustn't be a law in WA because the system our agent has moved to requiring us to pay our rent means we get hit with fees. In fairness they are not fees going to the PM but we still have to pay them nonetheless. Anyway why am I complaining sounds like $2.00 a month really is chicken feed compared to what the landlord has to pay...
2 other anecdotes 1 for long term leases the second for month to month;
We asked our agent some years ago when I first moved to WA whether we could do a 2 year lease as we thought it might be in everyones interest. They said straight up not after talking to the owner they do not do longer than 12 month leases. I would have thought some owners would want the surety of a 24 month lease? Apparently not.
Also month to month rentals which I used to often do in the east after a first 12 month lease don't seem to happen much in WA. Even if it meant paying more in rent it gave me the flexibility if my work changed or I had to move the reason I rent in the first place.
On one occasion we stayed on this month to month for 3 odd years in the one place. The owner was very happy with the extra rent no doubt, I was happy with the flexibility which I did use after three years. Again in WA when my first lease expired and I asked for month to month the agents said they do not do month to month....
Could it just be because of the way agents are paid? Is this possibly a breach in their fiduciary duty to the owner?
If it is it probably means their is a flaw in the way they charge fees. Would it not be better they just charge a higher % so that they want to find easy / long term tenants rather than trying to game it to get the highest fees?
change managers...
Most agencies do charge for lease renewals.
I don't and this is why...there is no benefit the my client if the fee is charged
obvious but if the tenant is a great tenant and pays rent on time, looks after the property then it is in everyone's best interest to keep them on lease.
Also, some owners want to increase rents to negate this extra charge - makes tenants upset and most times, moves them on - owners lose out...chances of getting nice tenants again left open to market forces. Owners actually see no financial benefit for most of the year (depending on how much is charged) anyway - rent has gone up, tenant still upset
Rent still needs to go up - but owners do not have the same kind of pressure when the costs are not so high in order to get good tenants on another lease...
Most agencies do charge for lease renewals.
I don't and this is why...there is no benefit the my client if the fee is charged
obvious but if the tenant is a great tenant and pays rent on time, looks after the property then it is in everyone's best interest to keep them on lease.Also, some owners want to increase rents to negate this extra charge - makes tenants upset and most times, moves them on - owners lose out...chances of getting nice tenants again left open to market forces. Owners actually see no financial benefit for most of the year (depending on how much is charged) anyway - rent has gone up, tenant still upset
Rent still needs to go up - but owners do not have the same kind of pressure when the costs are not so high in order to get good tenants on another lease...
[We asked our agent some years ago when I first moved to WA whether we could do a 2 year lease as we thought it might be in everyones interest. They said straight up not after talking to the owner they do not do longer than 12 month leases. I would have thought some owners would want the surety of a 24 month lease? Apparently not.]
If you are renting in a reasonably strong market the need to find longer leases is not as high.
1. RISK REDUCTION: If not the tenancy laws, then the govt body overseeing the legislation often seems to be slanted in the tenant's favour. The longer the lease signed with you, the harder it will be to get you out if you are causing trouble. Although you may be very nice in person and have great references, the property manager has just met you and it is safer for them (and the landlord) to take a 12 month rather than 24 month lease.
2. MAXIMISING RETURN: Additionally, in a strong market, we need to keep pace with the rental market. The rent can be increased during a lease IF the amount or a formula for working out the amount of the increase are specified in the lease. It is very difficult to do this for 'market value' as this is not a formula (there was a case in the NT covering this) and determining a market value 12 months in advance is speculation that an ingoing tenant will find difficult to swallow (and move on to the next property) - better to simply do a 12 month lease and asses the market in 12 months time - no speculation - no argument.
3. FLEXIBILITY: We just don't know what is around the corner. A landlord's situation may change and they may need to move in or sell the IP. Easier to sell when vacant. This situation is easier for tenants - they simply give notice that they are breaking the lease, pay the rent until a new tenant is found and the break of lease fee and they are out. There is no equivalent for landlords unless a situation has arisen that wasn't in existence when the lease signed that would cause undue hardship on the landlord - I do not know if this section of our Tenancies Act has been tested.
Also month to month rentals which I used to often do in the east after a first 12 month lease don't seem to happen much in WA. Even if it meant paying more in rent it gave me the flexibility if my work changed or I had to move the reason I rent in the first place.
On one occasion we stayed on this month to month for 3 odd years in the one place. The owner was very happy with the extra rent no doubt, I was happy with the flexibility which I did use after three years. Again in WA when my first lease expired and I asked for month to month the agents said they do not do month to month....
Could it just be because of the way agents are paid? Is this possibly a breach in their fiduciary duty to the owner?
Where I have worked before we never charged re-letting fees so there was no direct benefit to us to generally recommend fixed term leases but we did. In Darwin it is VERY tough to rent in the buildup (November/December) which is when people seem to leave town - to start jobs elsewhere in January + a host of other reasons. The likelihood of a tenant leaving during a periodic tenancy during this period is pretty high. Any extra rent is likley to be wiped out on a lengthy vacancy period if vacate occurs during this time unless the owners a) get lucky b) considerably reduce the asking rent. Although you stayed 3 years in 1 place, the point was that it gave you flexibility, so there was no guarantee that you would be there that long.
[/QUOTE]
I hope the above helps explain what happened.
Kind regards,
Jody
If you are renting in a reasonably strong market the need to find longer leases is not as high.
1. RISK REDUCTION: If not the tenancy laws, then the govt body overseeing the legislation often seems to be slanted in the tenant's favour. The longer the lease signed with you, the harder it will be to get you out if you are causing trouble. Although you may be very nice in person and have great references, the property manager has just met you and it is safer for them (and the landlord) to take a 12 month rather than 24 month lease.
2. MAXIMISING RETURN: Additionally, in a strong market, we need to keep pace with the rental market. The rent can be increased during a lease IF the amount or a formula for working out the amount of the increase are specified in the lease. It is very difficult to do this for 'market value' as this is not a formula (there was a case in the NT covering this) and determining a market value 12 months in advance is speculation that an ingoing tenant will find difficult to swallow (and move on to the next property) - better to simply do a 12 month lease and asses the market in 12 months time - no speculation - no argument.
3. FLEXIBILITY: We just don't know what is around the corner. A landlord's situation may change and they may need to move in or sell the IP. Easier to sell when vacant. This situation is easier for tenants - they simply give notice that they are breaking the lease, pay the rent until a new tenant is found and the break of lease fee and they are out. There is no equivalent for landlords unless a situation has arisen that wasn't in existence when the lease signed that would cause undue hardship on the landlord - I do not know if this section of our Tenancies Act has been tested.
Also month to month rentals which I used to often do in the east after a first 12 month lease don't seem to happen much in WA. Even if it meant paying more in rent it gave me the flexibility if my work changed or I had to move the reason I rent in the first place.
On one occasion we stayed on this month to month for 3 odd years in the one place. The owner was very happy with the extra rent no doubt, I was happy with the flexibility which I did use after three years. Again in WA when my first lease expired and I asked for month to month the agents said they do not do month to month....
Could it just be because of the way agents are paid? Is this possibly a breach in their fiduciary duty to the owner?
Where I have worked before we never charged re-letting fees so there was no direct benefit to us to generally recommend fixed term leases but we did. In Darwin it is VERY tough to rent in the buildup (November/December) which is when people seem to leave town - to start jobs elsewhere in January + a host of other reasons. The likelihood of a tenant leaving during a periodic tenancy during this period is pretty high. Any extra rent is likley to be wiped out on a lengthy vacancy period if vacate occurs during this time unless the owners a) get lucky b) considerably reduce the asking rent. Although you stayed 3 years in 1 place, the point was that it gave you flexibility, so there was no guarantee that you would be there that long.
[/QUOTE]
I hope the above helps explain what happened.
Kind regards,
Jody
