Yahoo Finance Barefoot Investor criticises rental agent scheme
Barefoot Investor Scott Pape has slammed “leading real estate agencies” for “outsourcing” rent collection to a third-party platform that charges fees to vulnerable Australians.
In a recent article on the Barefoot Investor website, the best-selling author and popular personal finance expert said renters were being punished through a “fast-growing scheme” called Rental Rewards that required tenants pay a fee in order to pay their rent.
“Here’s how it works: real estate agents outsource their rent-collecting to Rental Rewards, who charge renters a fee to pay their rent, and reward them with Qantas Frequent Flyer points,” Pape wrote.
Major property groups such as Ray White, Century 21, Laing+Simmons RE/MAX, Professionals and Richardson & Wrench are listed on the Rental Rewards website as clients.
The platform describes itself as a “convenient and rewarding service” that “processes rent payments on behalf of tenants and forwards the funds to the tenant’s Real Estate Agents”.
“Tenants can be rewarded with Qantas Frequent Flyer Points and other reward points just by using their eligible credit card to pay rent,” the website states.
But Pape said a reader by the name of Mandy had written to him saying her property manager had advised she was being migrated to the Rental Rewards platform, and was charged as a result.
“I chose the cheapest option —$78 a year — but some of the credit card options work out to be $312 a year, on top of rent,” Mandy wrote.
However, a spokesperson for Ray White told Yahoo Finance that the property group has never used the Rental Rewards platform and did not plan to.
"We have written to Rental Rewards requesting they remove our logo as they are using it without our consent," the spokesperson said.
"The logo they have used is actually around nine years old, too."
The Rental Rewards platform encourages users to pay rent through credit card “in order to utilise their ‘interest-free days’”, Pape said.
“And if you think my eye is twitching right now, and that I am POUNDING THE KEYBOARD, you are right!”
For a mother of three kids struggling to pay bills, a 1.45 per cent processing fee on $350 rent per week comes to an additional $264 a year in fees.
“Now, for you and me $264 may be a nice dinner out with friends. For her it’s a year’s worth of second-hand school uniforms and shoes for the kids,” Pape wrote. “It’s a lot of money.”
Renters are also promised 1,000 Qantas Frequent Flyer points every year by paying through card.
But a visit to Qantas’ Rewards Store website shows that a Bunnings $100 gift card costs 23,170 points – meaning it would take more than 23 years of paying rent to earn that $100 gift card.
“The value of a Qantas point is currently around $0.004 cents. In other words, those 1,000 rewards points that cost our single mum $263 a year are worth a measly $4 bucks.”
Find out if your agent is using Rental Rewards
Pape urged Australians to pick up the phone and call their real estate agent to ask whether they’re using the Rental Rewards scheme.
“And if they are, ditch them. Take your business to somebody who respects the person who’s paying off your asset.”
Yahoo Finance has reached out to LJ Hooker, Century 21 and Raine&Horne for further comment.
Rental Rewards responded to Yahoo Finance saying it is the real estate agent, not Rental Rewards which chooses which payment options are offered to a tenant and how Rental Rewards fees are passed on to the tenant.
But Tenants Union NSW CEO Leo Patterson-Ross said the practices described by Pape was a “big issue” that has been “going on for a long time”.
This article was amended on 23 June 2021 after a response was received on behalf of Rental Rewards.
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