OPPOSITION leader Mark McGowan’s plan to scrap a fee prospective tenants have to pay when applying for rental properties will lead property owners to lose confidence in Labor, a leading real estate group warned.
The fee, collected by landlords or real estate agents and usually totalling a week’s rent, is meant to cover for time lost checking references.
Applicants who accept the tenancy have the fee credited towards future rent, while those who are unsuccessful are refunded in full.
However, if the applicant is awarded the tenancy and rejects it to rent elsewhere, the landlord or agent gets to keep the fee.
The fee would be abolished entirely under Labor’s plan announced last month, with Mr McGowan saying it would minimise the upfront costs of renting a house.
“In the metropolitan area it is not uncommon for 15 applicants to put their name down for one rental property - this exercise ends up costing some applicants thousands of dollars as they compete for housing,” Mr McGowan said in a statement.
The opposition’s plan would go one step further than the Residential Tenancies Act changes passed through parliament last year, under which the rental option fee will drop to $50 on April 1 where the weekly rent is less than $500, and $100 when it is more than $500.
Professionals Real Estate Group chairman Ian Cornell said the fee was a necessary part of the process for agencies having to deal with multiple applications.
“Any plan to totally remove option fees will result in additional tightening of available property, reducing the vacancy rate even further and potentially tying up available property by prospective tenants who have applied for and been approved as tenants for multiple properties,” he said.
“Available rental stock has been an issue for more than 12 months across the state, with the greater metropolitan area enduring an ongoing vacancy rate below 2 per cent.
“We should be working towards providing solutions for prospective tenants and encouraging investment owners back into the market in order to return a state of equilibrium to the rental sector.”
Real Estate Institute of WA was also opposed to abolishment, stating it did nothing to address problems with supply, with the fee making for a “more orderly process in the rental system”.
