Yahoo Movies Pay the rent, and the rest: tenants hit back at the rise in third-party processing
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 firm which boasts of its “high ideals and standards”. The agent sent Max an email explaining that a third-party company called RentPay was its “primary and preferred” method of collecting rent.
RentPay, the email stated, was “the most cost effective and simple way” for tenants to pay their rent. If Max didn’t agree, it didn’t seem to matter: “All new leases moving forward will be required to use RentPay as their favoured method to settle rent amounts,” the email said.
What it didn’t say was that by signing up to use RentPay, Max would be forced to pay a $3 set-up fee, plus a monthly fee of $2 as well as 1.25% for each transaction for any payments via Visa or Mastercard. Using BPay would attract a transaction fee of 88c.
“I know it’s not a huge amount of money, but it is a shitty thing for them to do. We pay more than $600 a week, why should we then have to pay fees to pay our own rent?” Max says.
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The use of third-party rent processing firms by real estate agents came under renewed spotlight this week when Scott Pape, the author of the bestselling Barefoot Investor books, wrote a column highlighting how a company called Rental Rewards charged fees to tenants for paying their rent.
The column prompted an outraged response from Rental Rewards and the real estate firms that use it, and from other third-party processing firms.
Rental Rewards said the column was “incorrect, misleading and deceptive” and threatened legal action. Company spokesperson Sharon Samson said Pape had incorrectly described Rental Rewards as rent collectors when it was in fact “a payment processing platform”. It was up to real estate agents, she said, to decide who paid the fees associated with the service.
Pay in cash or pay the fee
As the Guardian reported this week, real estate agents have increasingly used third-party processing firms to outsource rent payments despite laws meant to curtail the practice.
In New South Wales, lessors are required to offer one reasonable fee-free way to pay the rent.
But the definition of reasonable is elastic: in some cases the free option offered by real estate agents is much less practical, such as payments by cheque or cash.
In Victoria, laws introduced in March require agents to provide at least one free way of paying rent, as well as an electronic funds transfer option.
The previous regime – which mirrored NSW – led Melbourne resident Orlando Skeete to deploy drastic measures to avoid using third-party services. In 2018 Skeete had been paying rent by direct debit for about a year when a new agency took over and told him he would need to begin paying via Rental Rewards.
Skeete and his partner read the contract and saw some of the same issues raised by Pape: a $5 membership fee, a $2 transaction fee plus 1.1% charge with credit or debit card payments, a $10 cancellation fee when the tenant ended the contract and a $15 dishonour fee. Some cards attracted a $10 transaction fee for payments of more than $500.
Unimpressed, Skeete asked to keep paying by direct debit card, but was told he could only do so if he signed up to Rental Rewards.
Eventually Skeete and his partner, a lawyer, read the Competition and Consumer Act and told the agent that what they were doing “might be illegal and constitute third line forcing” – a practice that requires renters to use a scheme 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 it was just the principle, like, screw these guys,” he says.
The agent told him he could pay by cash. So for the next two months, Skeete hopped on his bike, withdrew $3,000 in cash from his bank, and rode about an hour across the city to drop the rent off.
“When I got to the agent, they were clearly not set up to take cash payments so they tried to get me to sign up to Rental Rewards again,” he says.
Eventually they agreed to accept the money, but only after insisting he pay in exact change, something he had predicted.
After two months, the agency caved, but Skeete and his partner moved out of the property shortly after. He happily accepts the saga was more about his own “stubbornness”, but it annoyed him to think of others less aware of their rights being forced into the payments.
“One of the things they said to me when I was in the office was that I was their only client who had insisted on not using Rental Rewards. Everyone else just, you know, you get a form, you just sign it,” he says.
“I’m an engineer in a heavily regulated industry and my partner is a lawyer so we are both used to reading the fine print, and thankfully I have the flexibility in my work to take half a day off to cycle across the city to pay my rent.
“What pisses me off about this is there are so many people out there that either don’t know about their rights or don’t have the ability to jump through all of these hoops.”
Tenants don’t want ‘to rock the boat’
Victoria’s new legislation does not outlaw the use of third-party schemes, something Melbourne resident Bec Tsiamas recently discovered. Tsiamas signed on to Rental Rewards when she took out a lease last year, unaware she had any other options.
“I didn’t know any better and just clicked straight away,” she says.
Not knowing she would be charged for transactions, Tsiamas kept her rent in a separate account with the exact amount. Because it was short the cost of the transaction, she was then charged a $15 dishonour fee. More recently, when she signed a new lease, she was again put on to Rental Rewards: this time, paying her bond and rent advance cost her about $65 in fees.
“For a young person trying to make your way in the world it frustrates me that, you know, I can’t afford a house, and now I’m forking out more and more money for things I shouldn’t have to be paying,” she says.
Max, the Queensland tenant, says he was told by the agent his only fee-free option was to pay by cash. Fearful of missing a rent payment or getting on the wrong side of the agency, he acquiesced and signed on to RentPay.
“I knew it was messed up, but look, it’s generally better when dealing with rental people not to rock the boat too hard because they can ruin your fucking life,” he says.
“They can kick you out way easier than you can do anything to them.”
In Queensland, if a real estate firm wants to use a third-party processing platform it is required to offer tenants two other approved payment options. As Queensland’s Residential Tenancies Authority says on its website, third-party processors usually mean a tenant is charged a monthly service fee “and may be liable for a range of other fees and charges (eg. dishonour fee)”.
As the tribunal states, a property manager “must ensure the tenant is fully aware of all charges, fees and rules associated with rent cards”.
It was only after Max went back and read his lease agreement that he understood what he’d missed. It allowed payment by cheque or cash, and an annexure to the document included the fees for RentPay, which the real estate agency says is enough to comply with the legislation.
The owner of the firm, Julie Thornton, is unsympathetic to tenants in Max’s position. She says the firm uses RentPay because of its “convenience”, and receives no financial incentive.
“The benefit for us and for the tenant is they’re given their own individual unique code so there’s less chance for human error,” she says.
“I’m sure you’ll think I’m making this up [but] if a tenant deposits money with a direct debit they’ll put ‘rent’ as their reference. When we have 400 properties and you get 15 tenants who put ‘rent’ it takes a lot of time out of our day to track down who that money came from.
“They don’t have to use RentPay … I’m more than happy for them to come in and pay cash.”
RentPay did not respond to a request for comment.
* not his real name
