Letting fees to be axed

WELLINGTON: Letting fees which cost new tenants hundreds of dollars will be abolished before summer.

The Residential Tenancies (Prohibiting Letting Fees) Amendment Bill, which passed its third reading yesterday with support from Labour, New Zealand First and the Greens, bans letting fees in an attempt to make landlords meet the costs of letting a rental property, rather than tenants.

But National warned the legislation would only lead to higher rents.

The law will come into effect on December 12, in time for the busiest time of year for tenancy turnover.

Housing Minister Phil Twyford has called letting fees ‘‘an unfair and unnecessary burden’’.

He said the new law could put up to $47 million back into the pockets of Kiwi families each year.

‘‘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,’’ he said.

‘‘When moving into a new rental property, tenants can face up to four weeks’ bond, two weeks’ rent in advance — and one week’s rent as a letting fee — in addition to moving costs.

At present, there are no restrictions on letting fees, which are typically a week’s rent.

Landlords or agents who charge letting fees will then face a fine up to $1000, but they can still seek reimbursement from a tenant for expenses for tenant assigning, subletting or parting with possession of their interest in a tenancy.

Tenants can still be asked to pay rent in advance, and a bond.

National and Act New Zealand opposed the Bill, saying it would result in higher rents in the long term and might force some landlords to quit the residential rental market.

National pushed for a way to make letting fees more transparent so that an actual fee for service could be charged.

The Government is also undertaking a wider review of the Residential Tenancies Act and is considering a regulatory regime.

At present, there are no regulations covering letting agents, including property managers, and the select committee report on the Bill had concerns about agents checking possible tenants’ bank statements. — NZME/RNZ

❛ This will make a real difference to struggling

families