Is Your Sharehouse Getting Ripped Off by Tenancy Transfer Fees?

Contributor: William Arnott

It’s a situation all too common – one of your housemates has let the group chat know they’re moving out and you’ve scrambled to find a replacement. Now all you need to do is get the lease amended and get everything sorted out officially.

That’s when your landlord hits you with an eye-watering fee, potentially in the hundreds, just to change who is on the lease.

Don’t panic. If it seems way too high, it probably is.

What is a tenancy transfer?

A tenancy transfer, also known as an assignment, happens when a renter or group of renters want to move out of a rental property and transfer a new renter onto the lease. The original tenancy doesn’t end, it just moves over to a new person.

It’s different to subletting, which is when a renter transfers only part of their interest in the original agreement to another person. (For example, Person A is renting a house, and temporarily sublets a room in that house to Person B, because they happen to be travelling for a couple months. Remember travelling?)

If you want to actually change the name(s) on the lease, then you can be asked to reimburse your landlord for whatever costs their agent has charged them to process the transfer.

However, there’s a catch: the landlord has to actually have been charged the fee that you’re being asked to pay, and it needs to be reasonable for the work associated with the transfer.

What does this mean?

Basically, landlords can’t just charge you whatever they want. In 2010, the Victorian Civil and Administrative Tribunal (VCAT), found that a fee of $335.50 was unreasonable, as it was estimated that only one or two hours of work was necessary for the transfer.

The tribunal decided that $88 (now about $110, when adjusted for inflation) was reasonable, and they ordered the landlord to refund the difference.

VCAT isn’t bound by precedent, so they don’t need to follow that decision again. However, it has influenced what rate some agencies have charged, and the case has been used by some renters to negotiate a lower rate.

Alvis Piksons, a 23-year-old renter, paid a $165 transfer fee when they moved into their current sharehouse in Brunswick West.

“This is only the second sharehouse I’ve been in, and the first time I’ve had to pay a transfer fee, so I didn’t attempt to negotiate a lower fee,” they said.

“I didn’t understand the purpose of the fee at all, but my estate agency really didn’t like that I was on income support (they insisted I have my parents sign guarantor paperwork) so I wouldn’t have wanted to risk getting my lease application rejected.

“I think that anyone facing high transfer fees should definitely look at their options for negotiation, especially in the setting of the current public health crisis and the various tensions that causes or exacerbates.”

But it says in my lease I have to pay more than that?

Don’t worry, if you’re in Victoria, Section 27 of the Residential Tenancies Act states that a term in a tenancy agreement is invalid if it excludes, restricts or modifies (or purports to) any rights provided by the Residential Tenancies Act.

What that means is that landlords and real estate agents can’t charge way higher just because they put it in the lease, they still have to follow the law.

Alright, but who has to pay?

Unfortunately, that’s up to you to decide. Some sharehouses ask the person leaving to pay, some ask the fresh blood to pay up. Others split the fee between the two. VCAT doesn’t really care about disputes between housemates, but you can apply to the Dispute Settlement Centre of Victoria if things spiral out of control.

A quick point to note is that this is general information, not legal advice. Legislation also varies from state to state, so keep that in mind if you’re not in Victoria. If you’re in need of help, contact a community legal centre.

William Arnott is a journalist and delegate for the Renters and Housing Union (RAHU). You can find him on Twitter, where he’s probably doing something incredibly nerdy.