Tenants may face ‘application fees’
Sarah Washington has become familiar with tenancy application fees in the months she has been searching for a rental property, and she says they create another barrier in the search for a home.
The fees are a voluntary option in the tenancy application software provided by Renti, which is used by Property Brokers, Oxygen, Tommy’s and Goodwins, and in Trade Me’s tenancy tracker.
When they have paid the fee, prospective tenants can apply for rental properties, pre-verified for 90 days. This involves a credit check, which would usually be paid for by landlords or property managers.
But Washington says they are not fair to those who cannot afford them. ‘‘Twenty or $25 might not sound much, but it is if you are on a low income and your budget is stretched to capacity. It’s expensive to secure a rental, and this is an additional pressure.’’
Washington, who is based in South Auckland, has applied for more than 30 rentals in recent weeks. There have been multiple applicants for every rental she has looked at, and she says as a single mother on a benefit she does not stand a chance.
‘‘It is ruthless out there, but I can’t afford to take up an option that might be of some help.’’
While the fee is said to make the application process easier for tenants, a new Tenancy.co.nz survey, of more than 7000 people, found 94 per cent of respondents were opposed to the fees.
It also found more than 40 per cent of respondents did not pay the fee because they could not afford to, and this disproportionately affected Ma ori and beneficiaries.
While 58 per cent of Ma ori and 63 per cent of beneficiaries could not afford to pay, 33 per cent of New Zealand European people and 23 per cent of fully employed people could not.
Renters United spokesman Ashok Jacob says rent prices are pushing many tenants to their financial limits, and any added financial burdens on them will push out the people with the least resources.
‘‘If a landlord directly tried to charge prospective tenants to be on the top of the pile, I think it would be a blatant violation of the prohibition of key money in the Residential Tenancies Act. Unfortunately, because these fees are being charged by a third party, I’m not sure that the law is so clear-cut.’’
Auckland Property Investors Association general manager Sarina Gibbon says clarity from the Tenancy Tribunal is required on whether the fees are lawful, or whether they fall within the definition of letting fees.
Parliament has already taken an unequivocal position against letting fees back in 2018 and put a stop to landlords charging them.
‘‘I am also interested in whether the Commerce Commission or similar consumer protection agencies would take a position on whether these fees unfairly disadvantage consumers. I don’t think it is prudent for anyone in the sector to be cute with the law and play with loopholes.’’
She says the fees are opportunistic as they are only made practical by an inherent imbalance in the market, and they are an unnecessary, extra cost for tenants.
MBIE national compliance and investigation manager Steve Watson says there are some different ways services can be provided to landlords and tenants to assist them to navigate the rental market.
Allowing prospective tenants to voluntarily pay an optional fee to have their application prioritised is not in contravention of tenancy law, he says. ‘‘If a tenant believes they have been discriminated against through the use of rental platforms, they could consider making a complaint to the Human Rights Commission, or filing an application at the Tenancy Tribunal.’’
A Human Rights Commission spokeswoman says the fees may have implications under the Human Rights Act, but that is yet to be legally tested.
It is unlawful to treat any person who is looking for a tenancy differently from other persons in the same circumstances because of one of the prohibited grounds of discrimination, she says.
‘‘Conditions that appear to treat people the same on their face, but have the effect of treating people differently on a prohibited ground of discrimination may constitute indirect discrimination.
‘‘Employment status, defined as being unemployed or on a benefit, is a prohibited ground of discrimination. Under the Act, such conditions will be unlawful unless the person who imposes the condition establishes a good reason for it.’’
But Renti chief executive Will Alexander says the preverification fees do not disadvantage applicants because most people do not use them. About 99 per cent of applications are not preverified.
‘‘Since the tenancy law changes earlier this year, tenant selection is all about the broader vetting process, and property managers are diligent about vetting applicants,’’ he said. ‘‘It’s irrelevant how someone applies for a property, whether it is by referral, filling out a form in an office, or online, the person who gets the property is the person who the vetting process shows is the best for it.’’
He says the option made it easier for people who were applying for multiple properties in a short period of time.