What is the Option Fee?

Oct 10, 2022, 16:13 PM
Title : What is the Option Fee?

Property owners have the right to request an Option Fee with a tenant's application to rent a property.

Some owners require this fee, whilst others don’t. Essentially an option agreement grants a right but not an obligation for the applicant to enter into the lease.

It works like this;

  • If the rent is under $500 per week, the Option Fee is $50.
  • If the rent is between $500 and $1,200 per week, the Option Fee is $100.
  • If the rent is $1,200 per week or more, then the Option Fee is capped at $1,200.

The only exception to the above schedule is that if the property is above the 26th parallel (basically from Carnarvon and north, including the Pilbara and Kimberley), then the Option Fee cannot be more than $50 or $100 per week.

For all homes from Carnarvon south, including metropolitan Perth, the Option Fee of $1,200 applies to rentals of $1,200 per week or more.

If an application is successful, the owner grants the applicant the right but not the obligation to enter into a lease agreement. The Option Fee is for that right.

The applicant then has an agreed period of time to decide whether they want to sign the lease. A person may wish for an Option Fee because a suitable property has been found but the person is waiting upon their partner to also view the property.

If the applicant enters into the lease then the Option Fee goes towards the rent. If the successful applicant decides not to enter into the lease then the option fee is retained by the owner.

If an application is unsuccessful, then the money paid for an Option Fee will be fully refunded.

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