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Home · Property Management · Latest News : What the Heck is a “Privilege” Fee?

take aimWhile landlords in Fayetteville, N.C. were none too happy to learn they owed money to the city for the “privilege” of renting out properties there, the biggest surprise came from city council members: they didn’t know about the law, either.

According to a report in the Fayetteville Observer, the bills to landlords and property managers came from an auditor hired to track down unpaid fees for the city.  The auditor decided to apply an existing ordinance that allows for “privilege fees” on some businesses to rental property owners and managers.  Only after the phones lit up did the city council get involved.

The city has never before collected the fees against landlords and property managers, according to the report.  But that didn’t stop the auditor from assessing back fees and penalties in addition to the original fees.

City council members have expressed concern over the ambush, and want to look at the law more closely, especially as it applies to the large population of military personnel in the area. Nearly half of Fayetteville housing is rentals, according to the report.

One council member, also a landlord, told a reporter that the law was “news to me.”  He claims to have paid the fee.

Other businesses are subject to the privilege fee according to the report, including morticians and tattoo artists.  However, many professional services have remained exempt, including other real estate professionals.

The auditing company reportedly works on commission.

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  • Rosanne

    Most cities in the Phoenix metro area also have a privlege sales tax. These landlords should read the law closely – Arizona law states we are allowed to charge this fee back to the residents in addition to their monthly rent amount as long as you state it in your lease. Most Arizona renters are used to paying this tax and will often ask how much the rent will be with the tax included.

  • Kimberly

    I think these “fees” are outrageous. Every governmental agency is always looking to take, take, take. There is no benefit for the landowner for these fees than he is already entitled to by paying regular property taxes. There is no such fee here and I will fight to keep it that way!!!!!!

  • George in NY

    It is becoming quite common here in New York state for municipalities to require a “Rental Permit”, for which there is an inspection and of course a fee. The stated purpose is to improve the quality of rental housing. but existing codes and ordinances were more than adequate if enforced. The village where most of my rentals are located just passed the rental permit law last year, and over 70% of the residents are renters. The village will receive hundreds of thousands of dollars in rental permit fees paid by the landlords, and the village administration is bragging about how they kept the local tax increase to 0%. Another case of balancing the local budget on the backs of landlords.

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