Over the past week, there have been several articles in the press dedicated to the upcoming ban on charging letting fees to tenants. This was a key pledge of Labour in the lead up to last year’s election, and with the coalition parties backing the changes we are likely to see them introduced before the end of the year.
Letting fees in NZ are usually one week’s rent and are charged by Property Management companies to cover some of the costs arising out of the letting process. These would be advertising, running viewings, ingoing inspection, credit and background checks, lodging bonds, time spent processing applications and drawing up the agreement.
The Government’s aim is to reduce the financial burden on tenants when they move into a new property by removing this cost. They also feel that removes an “aberration in New Zealand law” where two parties contract a service and then charge a third party.
New Zealand is a bit of an anomaly currently with tenants, not owners, charged letting fees. In most developed countries, including Australia, the costs of re-letting are charged on to the owner. It is interesting to note that the UK is also going through similar changes to NZ, with a ban on letting fees being charged to tenants coming into force early in 2019.