Rental Application Fee

[Maverik]

Can anyone advise if you can charge a rental application fee to short listed prospective tenants to cover a credit check and advertising costs (i.e. trademe) if you are a private landlord advertising?. Not an agent.

[Keys]

IMHO. No...

[Perry]

Agree with the negative.

letting agent, in relation to a tenancy, means a person who, in the ordinary
course of business, acts, or who holds himself or herself out to the public as
ready to act, for reward as an agent in respect of the grant or assignment of
tenancies, whether or not that person carries on any other business

[Glenn]

Not permitted but I have noticed recently looking through TM for Nelson area there sure does seem to be a lot of "new and unknown / never heard of them" so called property managers charging letting fees.
I have recently updated my web site to permit on line applications. In fact each listing has an online button right beside the picture. This is encouraging a number of interested prospects to make an application before they even view the properties. I am finding this is very handy for me. In some cases I carry out the credit check ($12 cost to me) and can reject the applications before wasting my time to show them.

[skid]

Gee Glen,that cost could really mount up.
I guess im used to Auckland with lots of interest,but we save that for the short list,keeping in mind that quite a few are culled by phone.

[Glenn]

Small cities have small crowds.
Actually if you divide the number of adverts to let in Trade me by the number of private rentals in greater Auckland and compare the same ration in Nelson surprise the figures are not that much better in Auckland. Despite having new people apply all the time and never seeming to run out of bad applicants applying a lot of the veteran bad tenants do not bother contacting me because they know they will not get a good property and if they get a bad property they run the risk of a fast eviction. I always seem to have about 10 properties to let at any one time. Some properties let real fast and others are hard work. So anything I can do to catch a tenant for some of the properties has to be worth any trick I can come up with.

[td91]

Letting fees are exclusive to property agents. As when you sell through an agent they get a comission, the rental agent gets a letting fee for letting the house as it is their job to let and manage properties.

A letting fee can only be charged to the successful tenant who moves in.

Personally getting an agent to find a tenant is far easier bad tenants rely on private landlords who rarely do checks. A casual letting service is free to you and ensures a higher chance of getting a good quality tenant.

[Glenn]

Letting fees are exclusive to property agents. As when you sell through an agent they get a comission, the rental agent gets a letting fee for letting the house as it is their job to let and manage properties.

A letting fee can only be charged to the successful tenant who moves in.

Personally getting an agent to find a tenant is far easier bad tenants rely on private landlords who rarely do checks. A casual letting service is free to you and ensures a higher chance of getting a good quality tenant.

You must have a different version of the RTA. My copy says a letting fee can only be charged by a "Letting agent" Further more it defines a letting agent. Means a person who in the ordinary course of business, acts, or who holds himself or herself out to the public as ready to act, for reward as an agent in respect of the grant or assignment of tenancies, whether or not that person carries on any other business.
I fail to see where it says that you can only charge the fee if the successful tenant moves in. It is not unusual for successful applicants to then decline a property that has been offered to them.

I also have wondered for many years what (d) means. Does anyone know what "any payment of a prescribed class." means?

[td91]

You cannot ask for a letting fee, unless it's the tenant deemed successful.

Ok it may not be the exact tenant to move in, but you would assume the letting fee is only paid to the letting agent if that tenant plans on signing the tenancy agreement.

I've never heard the letting fee being paid by a tenant who hasn't had their application accepted.

[Glenn]

You cannot ask for a letting fee, unless it's the tenant deemed successful.

Ok it may not be the exact tenant to move in, but you would assume the letting fee is only paid to the letting agent if that tenant plans on signing the tenancy agreement.

I've never heard the letting fee being paid by a tenant who hasn't had their application accepted.

The likes of Home find and other similar named firms have acted for years charging a fee to get a list of properties regardless of them getting a property. I operated an 0900 service for a while doing something similar but gave up when some people I did not want anywhere paid and I did not feel happy with having taken their money.
I get at least one or two people a year who pay various amounts then change their mind. I have two options re collecting the money. One is to call it an option. Now the old RTA used to define option fees more carefully but the current version is a bit more sloppy. The other simple process is to simply call some amount of money (one week for me) as a letting fee. Once the market returns to the good old days perhaps we could start charging a fee up front regardless of success. I can remember the days when the column of wanted to rent was longer than the to let in the newspaper. The way I read the clause in the current RTA I see no restriction on asking for letting fees so long as you are a self declared letting agent. Offering your services to the public. What on earth is that supposed to mean. Perhaps you once offered to find a tenant for aunt Dolly. Clearly there are many people who definitely are not property managers who are now collecting a letting fee.

[Keys]

A simple ad in the services part on Trade Me would suffice.

[teamchase]

a letting agent. Means a person who in the ordinary course of business, acts, or who holds himself or herself out to the public as ready to act, for reward as an agent in respect of the grant or assignment of tenancies, whether or not that person carries on any other business.
I fail to see where it says that you can only charge the fee if the successful tenant moves in. It is not unusual for successful applicants to then decline a property that has been offered to them.

Would this imply that one must advertise the letting fee publicly, or simply that one must have an add in the public somewhere?

[Perry]

in respect of the grant or assignment of tenancies,
whether or not that person carries on any other business

I suspect that the keyword is the plural of tenancy. That
would strongly suggest that if you were a one-rental PI,
you wouldn't qualify. But what if you had two or more?

Glenn - any insights? Has this been tested in a Court, to
your knowledge?

[Glenn]

I suspect that the keyword is the plural of tenancy. That
would strongly suggest that if you were a one-rental PI,
you wouldn't qualify. But what if you had two or more?

Glenn - any insights? Has this been tested in a Court, to
your knowledge?

No I disagree the RTA says nothing about size of portfolio. The issue is about "offering or as the words say holds himself out to public to act in return for reward."
You note the clever bit put in about "whether or not the person carries on any other business"
That means that the customary day to day work of say selling real estate and doing one letting per year for a one off fee qualifies you. What is the bet the REI had an input into that clause in order to permit their members to charge a fee. What is the bet they never thought that it might then include the likes of travel agents or newspaper companies, or Trade me from also charging a letting fee. What after all is the difference between a letting fee and a finders fee.

Re court cases on letting fees. Been there many times due to my way of charging letting fees. I charge the fee only if the tenancy is short term, like less than 12 months or less than the specified lease period. In other words I charge it at the end of the tenancy not at the beginning. Multiple court judgement have uphelp my right as a letting agent to charge a fee however I so chose at what ever rate I so choose.

[Perry]

No. I disagree the RTA says nothing about size of portfolio.

I accept that. But it's not size, it's the numbers.
The RTA avoids that common clause about the
singular including the plural and the masculine
including the feminine, and vice versa, etc.

holds himself or herself out to the public as ready to act, for reward
as an agent in respect of the grant or assignment of tenancies

The plural is unambiguous. That's what made me wonder if
an owner-manager could charge a letting fee without any
contravention of the RTA if said PI had more than one ten-
ancy. (As opposed to more than one property - thinking
of a block of flats)