Twyford bill aims to ban letting fees
Housing Minister Phil Twyford has tabled a bill that would ban landlords from charging tenants letting fees.
He had previously considered doing this as part of a wider overhaul of the renting system, but has decided to do it as a standalone bill.
Landlords can charge new tenants for letting the property to them, nominally to cover fees they have paid letting agents. There is no maximum.
‘‘Letting fees are an unjustifiable tax on renters,’’ Twyford said, describing them as a method of ‘‘gouging renters’’.
‘‘I don’t know of any other area of the law where two parties can contract for a provision of services but then charge a third party.’’
He expected letting fees to be well and truly gone by the end of the year. All three parties in Government supported the move.
‘‘Around half of all Kiwis now live in rented homes. This bill could put up to $47 million into the pockets of Kiwi families each year,’’ Twyford said.
He said he didn’t expect rents to rise in response.
‘‘In 2012, Scotland banned letting fees, there was no evidence that it led to any increase in rents,’’ Twyford said.
Property Investors Foundation head Andrew King also didn’t think rents would necessarily rise in response.
‘‘It will in some areas but it is a extremely difficult one to predict,’’ King said.
But he was against the law, as he thought the flexibility letting fees allowed was key; it let prospective tenants compete with other tenants by deciding to pay for a letting fee that others wouldn’t.
‘‘From the tenants’ point of view at the moment it’s very difficult to get a property. So a lot of tenants will be willing to pay the fee,’’ King said.
‘‘At other times, when it’s actually difficult to get a tenant, landlords often pay it.
‘‘Having said that, I do think a lot of landlords do expect the tenants to pay it – it should be more of a negotiation.’’
Earlier this year Twyford told Stuff letting fees were unfair. ‘‘Under the current laws, particularly when there is a shortage of housing and it’s a landlord’s market, the market can be harsh and oppressive to people,’’ he said.
‘‘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.
‘‘This review will examine a range of changes to make life better for renters and will include looking at limiting rent increases to once per year.
‘‘It will also consider other initiatives to improve security of tenure and better allow tenants to make their house a home.
‘‘The review is expected to result in legislation being introduced to Parliament by the end of the year.’’