Reprinted from The West Australian.

Minister pans Labor’s vow on rent fee

The Government accused Labor yesterday of failing to do its homework after promising to abolish a real estate fee that is set to drop dramatically from April 1.

Opposition Leader Mark McGowan pledged, if elected, to get rid of the rental option fee to make house-hunting more affordable for lower and middle-income families.

The rental option fee – usually equivalent to a week’s rent – is collected by landlords and real estate agents and credited as rent if the applicant wins the tenancy but refunded in full if it is not awarded.

Landlords keep the fee to cover the cost of checking references if an applicant is awarded the tenancy but rejects it to rent elsewhere.Mr McGowan said the fee was  introduced in 1987, when there were far more rental properties available than renters, to discourage people from applying for multiple properties.

The current rental squeeze has resulted in more applicants competing for each property, making it necessary to lodge simultaneous applications for tenancies.

WA and NSW are the only States where the fee is still collected. “The average rent now is $460 a week. For many suburbs and many communities across the State it’s far higher than that,” Mr McGowan said.

“In a town like Port Hedland, that can be $2500 just to apply for the property. That is a big impost,  particularly on low income- earners.”

Real Estate Institute of WA president David Airey agreed the current fee was a “huge burden” but said it was set to drop to a flat $50 from April 1 under changes to Residential Tenancies Act regulations.

He said the changes had the support of the Tenants Advice Service and Department for Consumer Affairs in recognition that $50 was reasonable compensation for time spent checking references.

“I think (Mr McGowan’s promise) will appeal to tenants and conversely, it will not appeal to landlords,” he said.

Commerce Minister Simon O’Brien said Labor was playing “catch-up”.

“If they had any sort of working relationship with the real estate industry, they would know that changes are already in train to cap the rental option fee at $50,” he said.