When Max * moved into a new rental property in Queensland earlier this year, one of his first questions, naturally, was how to pay the rent.
So he called his new real estate agency, Harcourts Chermside, a Brisbane company that boasts of its “high ideals and standards”. The agent sent Max an email explaining that a third-party company called RentPay was his “primary and preferred” method of collecting rent.
RentPay, according to the email, was “the easiest, most cost-effective way” for tenants to pay their rent. If Max disagreed, it didn’t seem to matter: “All future new leases will have to use RentPay as their preferred method of paying rent amounts,” the email read.
What he didn’t say was that by signing up to use RentPay, Max would be forced to pay a setup fee of $ 3, plus a monthly fee of $ 2 as well as 1.25%. for each transaction for any payment via Visa or Mastercard. Using BPay would incur a transaction fee of 88c.
“I know it’s not a huge amount of money, but it’s a crappy thing for them to do. We are paying over $ 600 a week, so why should we pay a fee to pay our own rent? Max said.
The use of third-party rental processing companies by real estate agents was in the spotlight this week when Scott Pape, author of the best-selling books Barefoot Investor, wrote a column highlighting how a company called Rental Rewards was charging fees. charges to tenants to pay their rent. .
The column has elicited an indignant response from Rental Rewards and the real estate companies that use it, as well as other third-party processing companies.
Rental Rewards said the column was “incorrect, misleading and misleading” and threatened legal action. Company spokeswoman Sharon Samson said Pape mistakenly described Rental Rewards as rent collectors when in fact it was a “payment processing platform.” It was up to real estate agents, she said, to decide who paid the fees associated with the service.
Pay cash or pay the fee
As the Guardian reported this week, real estate agents are increasingly using third-party processing companies to outsource rent payments despite laws to restrict the practice.
In New South Wales, landlords are required to offer a reasonable and free way of paying rent.
But the definition of what is reasonable is elastic: in some cases, the free option offered by real estate agents is much less convenient, such as payments by check or cash.
In Victoria, laws introduced in March require agents to provide at least one free way to pay rent, as well as an option for electronic funds transfer.
The previous regime – which mirrored NSW – led Melbourne resident Orlando Skeete to roll out drastic measures to avoid using third-party services. In 2018, Skeete had been paying his rent by direct debit for about a year when a new agency took over and told him he should start paying through Rental Rewards.
Skeete and his partner read the contract and saw some of the same issues Pope raised: a $ 5 membership fee, a $ 2 transaction fee plus a 1.1% fee with credit card payments. or debit, a $ 10 cancellation fee when the tenant terminates the contract and a $ 15 dishonor fee. Some cards have a transaction fee of $ 10 for payments over $ 500.
Unimpressed, Skeete asked to continue paying by direct debit card, but was told he could only do so if he signed up for Rental Rewards.
Eventually, Skeete and his partner, a lawyer, read the Competition and Consumer Law and told the agent that what they were doing “could be illegal and constitute third-line coercion” – a practice that requires tenants to use a ploy with no alternative.
“To be honest it wasn’t about the money, it’s the fact that I already don’t really like rental agents to begin with, and that was just the principle, like, fuck these guys- there, “he said.
The officer told him he could pay in cash. So for the next two months, Skeete hopped on his bike, withdrew $ 3,000 in cash from his bank, and drove about an hour across town to deposit the rent.
“When I got to the agent, they clearly weren’t set up to accept cash payments, so they tried to get me signing up to Rental Rewards again,” he says.
Eventually, they agreed to accept the money, but only after insisting that he pay exact change, which he predicted.
After two months, the agency relented, but Skeete and his partner left the property soon after. He happily accepts that the saga was more about his own “stubbornness”, but it annoyed him to think of others less aware of their forced-to-pay rights.
“One of the things they told me when I was in the office was that I was their only customer who insisted on not using Rental Rewards. Everyone, you know, you get a form, you sign it, ”he said.
“I’m an engineer in a heavily regulated industry and my partner is a lawyer, so we’re both used to reading the fine print, and luckily I have the flexibility in my job to take a half-day off to walk around. city by bike to pay my rent.
“What pisses me off about this is that there are so many people out there who don’t know their rights or don’t have the ability to jump through all of these hoops.”
Tenants don’t want to “shake the boat”
Victoria’s new legislation does not prohibit the use of third-party programs, which Melbourne resident Bec Tsiamas recently discovered. Tsiamas signed with Rental Rewards when she took out a lease last year, unaware she had any other options.
“I didn’t know any better and I clicked straight away,” she says.
Not knowing that she would be charged for the transactions, Tsiamas kept her rent in a separate account with the exact amount. Because the cost of the transaction was short, she was then billed a $ 15 denial fee. More recently, when she signed a new lease, she was put on Rental Rewards again: this time paying her deposit and rent deposit cost her around $ 65 in fees.
“For a youngster trying to make his way through the world, it frustrates me that, you know, I can’t afford a house, and now I’m spending more and more money on things that I shouldn’t. not having to pay, “she says.
Max, the tenant from Queensland, says the agent told him his only no-charge option was to pay in cash. Fearing he might miss a rent payment or get on the wrong side of the agency, he nodded and signed with RentPay.
“I knew it was fucked up, but look, it’s usually better when dealing with rental companies not to rock the boat too much because they can ruin your fucking life,” he says.
“They can kick you out a lot easier than you can do anything to them.”
In Queensland, if a real estate company wants to use a third-party processing platform, they must offer tenants two other approved payment options. As the Residential Tenancies Authority of Queensland states on its website, third-party processors typically mean that a tenant has to pay a monthly service charge “and may be responsible for a range of other fees and charges (for example, refusal fees) ”.
As the court stated, a property manager “must ensure that the tenant is fully aware of all fees, charges and rules associated with rental cards.”
It wasn’t until Max returned and read his rental agreement that he realized what he had missed. It allowed payment by check or cash, and an appendix to the document included RentPay’s fees, which the real estate agency said is enough to comply with the legislation.
Business owner Julie Thornton is unsympathetic to tenants in Max’s situation. She says the company uses RentPay because of its “convenience” and doesn’t receive any financial incentives.
“The advantage for us and the tenant is that they are given their own unique code, which reduces the risk of human error,” she says.
“I’m sure you’ll think I’m making this up [but] if a tenant deposits money by direct debit, he will put “rent” as a reference. When we have 400 properties and you have 15 tenants who put in “rent”, it takes a long time to figure out where that money is coming from.
“They don’t need to use RentPay… I’m more than happy that they come and pay in cash.
RentPay did not respond to a request for comment.
* not his real name