Tenant Transfer Fee at End of Lease (MICM Real Estate, Melbourne)

Lnigel deborah on 13/01/2021 - 11:39
Last edited 13/01/2021 - 12:19 by 1 other user

Hello all, OzB newbee here but hoping I can get some help from the forum.

I am coming to the end of a fixed term 12 month lease in Melbourne, which I share with a single flatmate. When the fixed term expires, my flatmate is moving out, and I have found someone to replace him. The agent has told me that they cannot, under any circumstances, renew the lease for a new 12 month period with a new tenant.

Instead, we have to do a tenant transfer during the lease term (i.e. before it finishes) and then renew with the new tenant. As this is a lease assignment/transfer, we are required to pay their fee of $291.50 for the transfer. This fee, according to them, is allowed as per Residential Tenancies Act 1997, Section 84 (3). This fee is apparently charged to the landlord, then to me, to reimburse him.

I have two issues with this:

  • The fee, in my opinion, is not in the spirit of the Act. It is intended to cover costs where a tenant wants to transfer out mid fixed term, an inconvenience to the landlord. In my case, I could move into another unit in the same building and not have to pay any fees at all.

  • The fee is much higher than I would consider reasonable. Highly unlikely they will do anything more than pass on the new tenants details to the landlord for approval, and then amend the digital lease to be signed.

I have exhausted the negotiation avenue, having politely argued with the property manager at some length. If I threaten to move out unless it is waived, I risk them calling my bluff and never mentioning why I left to the landlord (the agent gets to charge all their relisting fees so hardly matters to them). So, my only options seem to be to put the paperwork though, sign the new lease and refuse to pay the fee (no idea what happens then, maybe they have to take me to VCAT?) or pay the fee in protest and take them to VCAT afterwards.

I have been trying to contact the tenants union for over a month but they never take my calls or emails. There is a VCAT case related to this one, but circumstances were a bit different.

Any and all advice welcome. If any landlords are out there, please let me know if you think I'm being unreasonable.

/edit

I should note that I really want to avoid having to move because the landlord has offered us a great rate and I really like the apartment (except for the shite agent). Hence why I'm not to keen on threatening to move out.

Poll Options

  • 26
    Threaten to move out
  • 1
    Don't pay the fee, see what happens
  • 4
    Pay the fee, take them to VCAT
  • 4
    Buy a house (FML)
Home & Garden

Comments

  • ThithLord on 13/01/2021 - 11:48
    +1

    That's outrageous. I say pay the fee and tackle through VCAT.

  • sampmel on 13/01/2021 - 12:02
    +1

    I am sure if you tell them that you would rather move out than paying those outrageous fees, they will pay out the fees themself than losing the rent for many months.
    Good luck.

    • newjerseydamo on 13/01/2021 - 12:11
      +10

      They won't have to pay anything because it's a made up charge. They're already being paid by the landlord to manage the property; this is their job and they're trying to profit even further from it.

      • aspirepranesh on 13/01/2021 - 12:41

        I moved out early (6 weeks before my lease expiry) with enough notice and my agent (had the listing and a few openings over 2 weeks) was lucky to find a tenant couple of days after we vacated in this market and agreed to waive it off based on market conditions!

        It is definitely a made up charge. They are idiots going down this path in this market,

    • Ocker on 13/01/2021 - 14:20

      Not really - they would be just as happy to re-let and get the letting fee for a new lease of 1-4 weeks rent

  • JIMB0 on 13/01/2021 - 12:07
    +2

    Make up some fee of your own to charge them for.

  • Quantumcat on 13/01/2021 - 12:14
    +1

    I would just move to another unit in the same building. Especially if the rent is less. Let the landlord deal with having an empty unit. At least it won't be too hard to move your stuff.

  • newjerseydamo on 13/01/2021 - 12:14
    +3

    IMHO it's easier to not pay and fight the fee than pay the money and fight for the money back.
    If I were you, I would send a letter in writing advising this is unfair and state your reasons why, and if not amended, you will go to VCAT.
    If they still refuse, then lodge a VCAT case and take them to court to get rid of the fee.

    I'm in a similar position where I am on the lease of my place and share with one other housemate. The real estate won't add them to the lease, however they will approve the potential new housemate after reviewing an application and confirming with the landlord. This is at no charge to me.

    Also, if both of you are on the lease, it's just lodging a new bond transfer form to the appropriate authority and to print up a new lease agreement with the new tenant; not exactly mind-bending work.

    • nigel deborah on 13/01/2021 - 12:21

      Perhaps they would just try to evict me? If I had a direct line to the landlord I wouldn't be worried. It's just that the agent has already demonstrated that they don't care about the landlord's best interests, otherwise they would have negotiated the fee down.

      • Quantumcat on 13/01/2021 - 12:24
        +1

        Do you know the landlord's name? Maybe you can look them up on Facebook and try sending them a message. I talk directly to my tenants through messenger.

        • nigel deborah on 13/01/2021 - 12:26
          +3

          I know his name but have been unable to find him on any socials… Also, the agent refused to provide his details when I asked previously (wanted to thank him for giving us a discount after COVID started).

          I think the landlord is very reasonable, actually. It's the agent that's being a PITA.

          • bobbified on 13/01/2021 - 13:06
            +2

            @nigel deborah: In the past, I've seen the landlord's full name (and sometime address) on the lease agreement.

            • nigel deborah on 13/01/2021 - 13:24

              @bobbified: His name is there, but no address. Had no luck tracking him down from the name only,

  • spal on 13/01/2021 - 12:31

    Perfectly reasonable that you shouldn't be paying the fees. I see what they are trying to do. Now that Melbourne is coming out of lock down, they will push for re-listing under guise of increased rent for the landlord. The agent makes more in re-listing fees, then renewal of lease. Apart from the options you have suggested, I would say sign the new lease, but cancel out the clause for the relisting fees. They will be forced to take it to the landlord. All offers must be communicated to the landlord. Or if you have direct contact details of the landlord (on the lease agreement). If you have previously communicated with them, if they were reasonable, have a chat to them. You can also just have yourself on the lease too.

  • bobbified on 13/01/2021 - 13:04

    In terms of process and applications, why don't you let the lease expire and start a new application with the new co-tenant? That way there is no lease-transfer (fee) and it's not a "renewal". Doing so doesn't mean you need to move out and move back in. The new lease just has to have a commencement date the day after the existing one expires.

    • nigel deborah on 13/01/2021 - 13:16

      They told me I'd need to vacate regardless, then move back in…

      • bobbified on 13/01/2021 - 13:22

        If the new lease commences the day after the existing lease expires, why do you have to move out and move back in?

        • nigel deborah on 13/01/2021 - 13:25

          I shouldn't have to… But the agent insisted it would be required, in order to complete end of lease inspection. Just another way to force us to pay the fee.

  • beeawwb on 13/01/2021 - 13:26

    I tend to think that even though you're providing a direct transfer of the lease (from "Tenant A & B" to "Tenant A" still requires a change of the agreement) there's "some" (but minimal) work involved, and so "a" fee could be applicable, but probably not in the realm of $300.

    The decision in the VCAT case you link seems to be pretty relevant, the circumstances are similar enough. Namely you can be charged a fee but it has to be “in connection with the preparation of a written assignment of a tenancy agreement” and estimates that a reasonable amount of work for this would be "one or two hours" - for which they allowed $88 (statements 20 and 21).

    If it was me I'd probably pay the fee and then go to VCAT if I didn't want to risk losing a good place.

    • nigel deborah on 13/01/2021 - 13:31
      +1

      Perhaps a middle ground would be to inform them I will go to VCAT after signing the new lease? Unlikely to result in them immediately seeking eviction, but might put pressure on them to not charge the fee.

      I wonder if it's the agent or the landlord who would have to pay for representation. Don't want to put the landlord out of pocket, he has treated us well during COVID.

      • beeawwb on 13/01/2021 - 13:37

        Seems fair to me, especially if you provide them with the evidence that 2 separate cases (Jupp v Chambers R2009/41476 and Miller v Psomas R2009/31146) have found that only reasonable work can be charged. You're trying to save everybody time and tribunal fees (which each side would have to bear on their own, as I understand it) and get things over with. A reasonable person would probably agree. Question is whether MICM are reasonable.

        No idea if the agent or LL would have to pay but I'd guess that the agent would probably try to charge the fees to the LL in any circumstance.

        • nigel deborah on 13/01/2021 - 13:53
          +1

          Thanks. Definitely seems like it might work. I would be OK with a fee around the ~100 mark.

  • rambutann on 13/01/2021 - 14:02
    +1

    Yeah that's dumb af.

    What should happen is when the lease ends, you agree to a new lease, but with another persons name on it.

    The landlord is (sometimes) charged a lease renewal fee, and the world keeps rotating..

  • jimbobaus on 13/01/2021 - 14:03

    The landlord:
    Must not unreasonably withhold consent to transfer the lease
    Cannot charge a fee for consenting, or refuse consent on the ground that the tenant has refused to pay a fee
    Can require the tenant to pay reasonable costs incurred for preparing a new lease document

    What is considered reasonable though?
    Will they do another condition report?

    The agent would get a re-letting fee if you vacated and they had to re advertise etc (usually first months rent)

    By forcing you to transfer prior to end of lease they are covering themselevs so they still earn

    Dodgy AF… but legal sadly.
    Depends on whether VCAT considered the amount reasonable and whether the agent could justify the amount
    I suspect MICM have been down this road before (VCAT etc)

    • nigel deborah on 13/01/2021 - 14:09

      They won't be making a new condition report. And they refused to provide a breakdown of costs incurred.

      You might be right about VCAT. It would explain why they are so happy to flat out refuse to negotiate on the amount.

      • jimbobaus on 13/01/2021 - 14:10

        My friend rented from MICM once before… he legit excludes them now when he looks to move

        They are good at keeping Bonds too
        VCAT residential list hearings have them listed OFTEN
        they know the ropes 100%

  • luke700 on 13/01/2021 - 20:24

    Reasonable fees cant line the directors pockets just cover the expense of processing.

    $110 inc GST is definitely out there with some agencies.

    At $70k pa property manager wage, that's $140 for 2 hours work.

  • Hardlyworkin on 13/01/2021 - 20:59

    I had a similar situation with MICM a cpl years ago. BTW MICM are hopeless, it's a revolving door of employees. Escape now if you can unless you have a particular affinity with your place.

    They said one thing but ended up doing another and we didn't end up having to pay. I'd I were in your shoes I would either just sign the new lease with just you in it or better yet move out and deal with a better agency and take advantage of the discounted CBD apartment rents.

  • Ashura66 on 10/01/2023 - 14:11

    Hey @nigel deborah, sorry to revive an old thread but I'm going through the exact same scenario with the MICM.

    Would you tell me what you ended up doing and what you would advise?

    Really don't want to pay the hefty ~$300 in fees for no apparent reason but at the same time, we really like the place and the rental price is reasonable.

    • nigel deborah on 10/01/2023 - 14:31
      +1

      There's nothing you can do immediately unless you are willing to give it up on principle. You can lodge a compensation claim afterwards to try and recoup the money, although consider the negative impact this might have on the relationship with the agent. I did that after I moved out (a year later) and it's still waiting to go to VCAT. Note though that there's a $60 VCAT application fee and no guarantee of success.

      All they need to do, really, to justify it is to prove that is how much they charged the rental provider (property owner). They may actually be charging them the same huge fee, who knows.

      If you plan to make a VCAT claim down the track, make sure you read the applicable laws (tenancy act) and ask the agent pertinent questions before making payment. For example
      - Can you provide evidence the rental provider has been charged this fee
      - Can you provide a breakdown of costs which demonstrates how this fee is calculated
      Then, explicitly state when you pay that it's 'under protest'. Also be aware they can't charge until after you've been accepted (i.e. they can't make you pay then refuse your application).

      Before doing any of that you might consider a good faith negotiation with the agent. Ask nicely if they'll go lower. I might have just had a shit agent.

      My advice though would be to find a new place. MICM were a hassle start to finish. Just finished (won) a big dispute at end of lease after they made baseless bond claims for carpet cleaning among other things (way beyond the legal requirements). Plus they violated the Act half a dozen other ways in the process, including conducting inspections without notice while we weren't home and doing the final condition report without us present. Avoid at all costs.

      • Ashura66 on 10/01/2023 - 14:44

        Might have to suck it up and pay. Unfortunately the rental price is good considering the current market and finding another one is not easy.

        What happened to them after violating the Act? It's insane that they just waltz into your place without notice. Did they get a hefty fine?

        I am also concerned about my future bond as they are not doing an inspection to check for damages by the current tenants, which means any damages from prior tenants fall on us.

        Thanks for the advice, hopefully we can take some precautions against the snakes

        • nigel deborah on 10/01/2023 - 14:56

          I reported them to consumer affairs Vic but not sure if anything came of it. Most these agencies, including VCAT, are just so swamped they don't have capacity to even look into that kind of thing. That's how (bad) agents get away with this kind of stuff.

          Having no condition report is a problem, I'm not actually sure who is legally responsible if there's damage identified by the agent which you can prove occurred before you moved in.

          Some agents do condition reports and settle any damage issues when the transfer occurs, but it's difficult when nobody is moving completely and no doubt MICM won't do anything above the minimum.

          Are you moving in towards the end of a fixed term lease? If you're somehow still on COVID slump pricing from late 2021, you might find they throw you a massive price hike out of nowhere. Unless you're signing a new fixed term, they can raise the rental price at any time and by any amount (i.e. bring it back up to market, not 'cheap' anymore).

          • Ashura66 on 10/01/2023 - 15:46

            @nigel deborah: For real, agents here can make renting here a nightmare.

            I'm moving in after signing a new fixed term lease with a price increase. Price is still better than what's on realestate.com and domain.

            I'll try to get the condition report done just in case. Not keen on them running away with bond money.

            • nigel deborah on 10/01/2023 - 16:29
              +1

              @Ashura66: Sounds good. Just remember when it comes to it, they don't hold your bond (gov does via RTBA) and the only way they can take it is via VCAT compensation claim. Applies to damage (much more is wear and tear than you think) and end of lease cleaning (much less required than they try to tell you). Goodluck!

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