06/03/2007 - 22:00

Government cops flak for letting fee decision

06/03/2007 - 22:00

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The state government decision to abolish rental letting fees from April 5 has raised concern among some in the sector of even greater pressure being placed on tenants in the form of higher rents.

Government cops flak for letting fee decision

The state government decision to abolish rental letting fees from April 5 has raised concern among some in the sector of even greater pressure being placed on tenants in the form of higher rents.

Last weekend, Premier Alan Carpenter and Consumer Protection Minister Sheila McHale announced that letting fees, typically a week’s rent paid by tenants when signing a lease, would be scrapped in an effort to provide immediate relief for struggling tenants.

Mr Carpenter said Western Australia’s economic boom had resulted in a pressurised rental market, meaning consumers had to battle each other for properties before finding bond money and rent in advance.

“Consumers are already faced with enough costs when entering a tenancy, without having to pay more fees which can lock people out,” he said.

But the Real Estate Institute of Western Australia disagrees, believing the removal of letting fees was not a real fix for the problem.

President Rob Druitt said the supply of housing was the real problem at hand, and all the government was doing was tinkering around the edges.

“This move is purely in the government’s best interest by appearing pro-active on the surface. In an environment where landlords have the balance of power, these costs will simply be passed on through higher rents to the tenant,” Mr Druitt told WA Business News.

“The government should stop tinkering around the edges and do something meaningful that will translate into a benefit, like reforming the property tax system and creating more public housing stock.”

Mr Druitt said the property industry had not been consulted prior to the government’s decision to abolish the fee.

Ms McHale has indicated that the government would examine the possibility of scrapping or capping ‘application’ and ‘option’ fees, the charge payable when submitting a rental application.

Geoff Baldwin.com Realty Group managing director Geoff Baldwin said the government viewed the real estate industry as a soft target, and expected its decision would quickly put more pressure on rents.

“If the government was really serious about alleviating the rental crisis it would immediately implement stamp duty relief. By announcing [the possibility of] stamp duty relief for first home buyers four months out, it has stagnated the whole market and created enormous extra pressure on the rental market as prospective buyers hold out in rental properties,” Mr Baldwin said.

Since June 2001, the median rent has increased by 60 per cent to $260 per week.

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