Letting fees banned
Thursday 1 November 2018
It is no longer legal to charge tenants letting fees after Parliament today voted to pass legislation banning them from 12 December.
By Miriam Bell
Housing Minister Phil Twyford says letting fees are unfair and banning them is a good first step in improving the life of tenants while the broader review of the Residential Tenancies Act continues.
“Our tenancy laws are antiquated and don’t reflect the fact that renting is now a long term reality for many of our families.
“Around half of New Zealanders now live in rented homes. This change could put up to $47 million into the pockets of Kiwi families each year.”
He says the law has been changed in time to give tenants a break before the summer rental season when so many tenancies turn over.
“With homeownership rates at a 60 year low, this change recognises that we need to take action now to make rent more affordable so people can save to buy their own home.”
While the change has been pitched at preventing landlords from charging letting fees, in reality landlords have never been able to charge them.
It has been letting agents or property managers, who rent out a property on behalf of a landlord, who can charge letting fees.
Not surprisingly, the property industry has not welcomed the ban – although it is commonly expected that costs to landlords will be increased to cover the shortfall from tenant letting fees.
REINZ chief executive Bindi Norwell says that banning letting fees might help tenants in the short term, but in the long run it’s likely the costs will be passed on to tenants via an increase in weekly rent.
“Our concern is that the ban may make tenants with shorter term tenancy requirements, such as students or seasonal workers, less attractive to landlords making it harder for them to obtain rental accommodation.”
Given the current raft of legislation being directed at landlords, this may contribute to more landlords’ deciding to exit the rental market, she says.
“This would further reduce the available pool of rental properties and drive up prices… We continue to call for a balanced approach to avoid harming the rental market in the long term.”
The NZ Property Investors Federation has previously opposed the ban: it prefers an option whereby a fee should remain and whoever gets the benefit from it should pay for it.
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