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March 19, 2018 | by  | in Ask the Advocate Opinion |
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Ask The Advocate

Dear Advocate,

I just moved into a new (exorbitantly expensive) flat, and my landlord charged a non-refundable fee of $230 per person, on top of bond and rent in advance. Are they allowed to do this?

Yours sincerely, Flat Broke.

Dear Flat Broke,

Unfortunately, landlords are allowed to charge a fee like this, called a letting fee, under the current law. Letting fees are an exception to the general rule that landlords cannot charge “key money” (a

non-refundable fee charged to the tenant, in order for them to secure tenancy of the

property). There are rules surrounding how and when letting fees are allowed, and the Residential Tenancies Act 1986 highlights two key factors:

Firstly, the fee must be no more than one week’s rent plus GST (15%): if your rent is $200 per person, $230 is the maximum fee they are allowed to charge.

Secondly, it may only be charged when there is a “letting agent” involved. A “letting agent” can be a solicitor or land agent; most commonly, agents operate through agencies such as Quinovic or Full House. If you are dealing directly with your landlord, and they have an interest in the property, (through direct ownership or indirectly e.g. through a trust), they are not allowed to charge a letting fee.

If your landlord has charged this fee but they are not entitled to do so, it is unlawful and they can be forced to pay you up to $1,000 in damages. A recent case heard in the Tenancy Tribunal (Yuan v Sau) resulted in a tenant being awarded $500 when their landlord charged a letting fee, despite being the owner of the property.

Hopefully, letting fees will soon be a relic of the past, as Labour has stated plans to abolish them.

xx Advocate

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