URGENT - PM forcing tenant to have rent direct debited from their bank account

[angelone]

Hi All

I have come across a PM that the only way they will accept rent and accept you as a tenant is if they direct debit your bank account on a fortnightly basis for rent to ensure you are always the 2 weeks in advance that is required.

I asked the other PM I was considering if they could do that and they said they had to offer the tenant 4 different payment methods.

The other PM is a lot cheaper and more responsive so I am erring on the side of appointing them as the new PM BUT only if they will insist only payment method for tenant is by direct debit as per other PM

The PM that only allows this method of payment cites their arrears are almost non-existant and given the tenant I have has gotten into a month arrears and was basically using me to finance their cash flows for xmas and back to school expenses (and every PM who does the normal practice could not do anything until they are 15 days in arrears) I think the direct debit is a good and the only option to deal with this tenant.

As otherwise they will use the system as they have done on several ocassions

What are peoples thoughts?

Also what are peoples thoughts on the below charges by the direct debit only PM:

1) 1.5 times weekly rent to find a new tenant (1 wk rent)
2) $8.80 postage per month ($5.50)
3) 8.8% mgmt fee (7.7%)
4) $55 to do new lease ($33)
5) EOY statement $15 (Free)
6) $165 per hr to prepare for tribunal case ($30)

These seem excessive to me and I will question why if direct debit is free how they can justify these charges when the norm is per my understanding in brackets after their charges shown above

Am I missing something or do other people agree?

I urgently need an answer by tonight as I have to appoint a new PM tomorrow

Thanks guys!

 

[ps0104]

Just because you are forcing them to direct debit doesnt mean there will be money in the account when it comes time for the direct debit to be taken out. I can't see how the direct debit only PM would have arrears that are substantially lower than any other PM.

 

[Propertunity]

I asked the other PM I was considering if they could do that and they said they had to offer the tenant 4 different payment methods.

Not true and if your other PM really thinks that to be the case, then he/she does not know the Act. In NSW: "tenants will have least one fee-free way to pay their rent".

Also what are peoples thoughts on the below charges by the direct debit only PM: ....These seem excessive to me ....

It's a free marketplace (mostly) . Businesses can ask what they think the market will bear. You have the right to not use their services or negotiate them (down).

My personal view is that they are on the high side. I don't pay $165ph for a PM to prepare for the Tribunal

 

[Ausprop]

Just because you are forcing them to direct debit doesnt mean there will be money in the account when it comes time for the direct debit to be taken out. I can't see how the direct debit only PM would have arrears that are substantially lower than any other PM.

the penalties and overdraft fees mean that the tenants won't want it to bounce as it becomes an expensive exercise. plus if they happen to have funds there on the day for whatver purpose the DD will snatch them. I think it's a sustainable argument that their arrears would be lower.

 

[Jacque]

My personal view is that they are on the high side. I don't pay $165ph for a PM to prepare for the Tribunal

Woah me neither! There is a standard mandatory $36 attendance fee but $165 per hour is quite excessive.

 

[mattysavager]

In regards to Direct Debit - we have it as an option for payment, and of maybe the 40/50 per week that we do - about 5 bounce back - same tenants every time.

It doesn't really make a difference to us. We cannot FORCE a tenant to pay rent, we just keep our arrears low by chasing them up every day until they pay.

We have a lot of tenants on unemployment or disability pensions and we sometimes insist that they use Centrepay (so centrelink pays the rent before paying the usual payments) but this method is fool proof - normal bank direct debits are not.

As for the fees - they seem high. I charge 8% + GST, 1 week letting fee, and the rest that you listed are included in the 8%. I know that different states have different rates, but I would definitely be trying to negotiate on those prices.

Matt

 

[Dazz]

Am I missing something or do other people agree?

Yes mate, what you are missing is the rule book for your 'asset'.

It doesn't matter what the first Property Manager you spoke to said.

It doesn't matter what the second Property Manager you spoke to said.

In fact, it doesn't matter what any Property Manager says.

It also doesn't matter whether anyone out here in internet land agrees with one or other of your PMs.


The only thing that matters is what is written down in the rule book.


Get yourself a copy, you owe it to yourself if you are going to continue to play the residential Landlord game, to know what the rules of the game are. It ain't difficult, and it ain't too long.


See attached link for the relevant page in the rule book, assuming your asset is in NSW.


http://www.legislation.nsw.gov.au/maintop/view/inforce/act+42+2010+cd+0+N


Given who wrote the rule book, and who the rule book was designed for, I treat with extreme trepidation any sentence that starts with "trying to force the Tenant to...."

 

[Burramys]

Direct debit is convenient for the manager, but may not be for the tenant, who is arguably the person to look after. My tendency is to have a number of options and some flexibility. If the tenant likes to pay fortnightly then this is good, or they may prefer monthly. Insistence on one or the other is to be avoided if possible.

As advised above, know the rules, and also what most managers do.

The first set of fees are a bit high, except for the fee to find a new tenant. In Vitoria the fee is two weeks. That said, the costs do not generally depend on the rent, and so linking them is a rip-off. I get and end of year statement for nothing and that’s it. No postage. The tribunal fee is way under a lawyer’s fee. However, you should be in a position to prepare a brief of evidence and argue the case yourself.

Victoria has a court that is equal to a Magistrates’ Court, VCAT, the Victorian Civil and Administrative Tribunal. I’m no lawyer and have had many appearances, most of which I have won. It has not been easy at times, but one learns. Nothing personal, then wham.

 

[DaveM]

I would beware of any PM who disregards the tenancy act and does not abide by the law. When the proverbial hits the fan, its you thats hauled to the tribunal, while the PM gets paid to fix up the mess with their $165 an hour tribunal cost.

 

[mattnz]

You want the Direct Debit to be coming out in line with the tenant's pay cycle. If they are paid fortnightly on a Thurs night, have the DD coming out the following Fri morning, then there should always be money in the account and you get paid first, they eat rice for the week if they need to stay within their budget.

 

[Scott No Mates]

Is the agent excluding alot of good tenants because they will only accept them if they agree to dd?

Even Westfield doesn't put this requirement in their leases although rent is paid via eft.

 

[zepth]

Is the agent excluding alot of good tenants because they will only accept them if they agree to ddi?

Even Westfield doesn't put this requirement in their leases although rent is paid via eft.

I would say yes. When we just moved we noticed one particular real estate who required direct debit authority as the only available form of payment and we didnt even bother with their listings as a result. We have had enough dealings with dodgy agents to know not to trust them with direct debit control.