Letting fees axed for renters but who picks up bill?
Urban Development Minister Phil Twyford says up to $47 million could be put back into the pockets of Kiwi families after legislation has passed banning the charging of letting fees to tenants but Bay of Plenty property leaders are not convinced.
Twyford announced the law change last week and said the ban was a “good first step in improving the life of renters” while the Government reviewed the Resi- dential Tenancies Act.
He said about half of all New Zealanders were renters and the ban would 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,” he said.
Twyford said letting fees were “unfair” and had no economic rationale as there was no relationship between the amount of the charge and the cost of the services provided.
“With home ownership 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,” Twyford said.
He said the proposals in the broader review were designed to provide tenants with security of tenure, which allowed them to make their house a home, while protecting the rights and interests of landlords.
“Ultimately the best way to put tenants in a better situation is to increase the supply of housing, and end the shortage that is driving rents up. KiwiBuild and the Government’s Urban Growth Agenda are designed to increase supply,” Twyford said.
But Rotorua Rentals co-director Richard Evans said extra costs were already being put on Rotorua tenants.
Evans said the Government’s comments that the life of renters would be improved were “ridiculous”.
“Exactly the opposite is happening and the Government doesn’t understand that.”
He already knew of local landlords who had increased their rental prices in anticipation of the changes.
An example Evans gave was on a $300 a week property — if rent was increased by $10 a week, the letting fee would already be covered after 30 weeks.
“In the end, the landlord will be better off,” he said.
Rotorua Property Investors Association president Debbie Van Den Broek said as a property investor, her company, RentAssured Rotorua, worked with long-term tenants so she did not expect the law change to have a drastic effect.
She said letting fees only made up about 13 to 15 per cent revenue for the company, but property managers in different regions would be affected in different ways.
Van Den Broek said the way current letting fees were set was “not fair” as a letting fee for a Rotorua rental could be $300 but $1000 on an Auckland property. As a landlord, Van Den Broek said she would always want longterm tenants and would not encourage her property manager to turn over tenants as it put pressure on her property in the long term. Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said the change in legislation came earlier than he expected but it was anticipated.
He said a positive to the law change was that tenants looking to move into a rental would have lower move-in costs.
He said the industry would experience a transition period where property managers would be working out where this extra cost would go, but it was likely to result in extra costs for tenants.