Parliament bans letting fees on rentals

CREDIT: Henry Cooke/Stuff
Housing Minister Phil Twyford announced a new bill to ban letting fees in March.

Tenants will no longer have to pay letting fees to agents and landlords, after Parliament voted to ban the practice. 

Housing and Urban Development Minister Phil Twyford estimated the change, which comes into force on December 12, could prevent the handover of up to $47 million in payments he said were "unfair" and had "no economic rationale". 

"This will make a real difference to struggling families. There are significant costs associated with moving to a new rental property, which many families are now forced to do every year.

Letting fees have been evicted from the landlord's entitlements, after Parliament voted to ban them.
Letting fees have been evicted from the landlord's entitlements, after Parliament voted to ban them.

"When moving into a new rental property, tenants can face up to four weeks' bond, two weeks' rent in advance – and one weeks' rent as a letting fee – in addition to moving costs," he said. 

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"Letting fees are unfair. They have no economic rationale and there is no relationship between the amount of the charge and cost of the services provided.

"Banning the charging of letting fees to tenants is a good first step in improving the life of renters, while we continue our broader review of the Residential Tenancies Act."

But while the law change will now come as no surprise to the industry, it's unlikely to be welcomed. The Real Estate Institute of New Zealand (REINZ) said in August, it would like to see tighter regulation in the market but had concerns about how the costs of letting fees would be covered if they were abolished. 

"Letting fees covered  property inspections, advertising, viewings, background checks on tenants, liaison with landlords and processing the tenancy agreement," Bindi Norwell, REINZ chief executive, said.

"So actually, they do quite a lot of work. So someone has got to pay for that."

National has maintained the argument that getting rid of letting fees would drive up rents.