New Zealand Property Investors' Federation

The NZPIF is the umbrella body for 20 local Property Investors' Associations throughout New Zealand.

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www@nzpif.org.nz

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20-08-2018

The NZPIF submission on letting fees

The Residential Tenancies (Prohibiting Letting Fees) Amendment Bill aims to prevent tenants being charged a letting fee by property managers.

Whether or not Letting Fees are paid by the tenant is arguably not the highest matter our industry currently faces, however it is still important. Currently private landlords are not allowed to charge a letting fee to tenants. While some say this isn't fair and we should be able to do so, not having to pay a letting fee is an incentive for tenants to choose our properties over others that do charge a fee.

The Bill has been sent to a Select Committee to hear public submissions. The deadline for written submissions has passed, but verbal hearings were heard a few weeks ago. I presented for the NZPIF. However I stayed and listened to other presenters as well.

The tenant group’s main argument was that tenants cannot afford rent let alone a letting fee and that they shouldn't have to pay when the landlord gets all the benefit.

They also mentioned the research from Scotland's tenant group, Shelter, where they claimed that only 2% of Scottish landlords increased their rent when Scotland banned letting fees.

During my presentation I answered these points before starting the NZPIF submission, focussing mainly on why tenants do receive a benefit from paying the letting fee. That benefit is putting themselves ahead of other tenants that either wouldn't or couldn't pay the fee. The Bill will take away a tenants right to pay more and get potentially a better service, lower competition from other tenants and a wider selection of properties.

This was backed up by all the property managers who spoke. They also added that tenants generally don't complain about the fee. A property manager who had been in the business for twenty years said he had only spoken to two disgruntled applicants over that time.

The MP's seemed particularly interested in discussing splitting the fee, rather than banning tenants from paying it. They were interested in our view of having owners using a property manager just to find them a tenant pay the letting fee as they were getting the benefit.

The National MP's liked the NZPIF suggestion of tenants paying off the letting fee over time and a requirement for the landlord to return the fee if they ended the tenancy within, say, a year. One said that these two measures negated the need for any further legislation.

The MP's on the committee shared that the vast majority of submitters said that rental prices would rise. The MBIE impact statement estimated this at $10pw. They seemed to accept this which was pleasing.

However politically, Labour are still likely to push the bill through, as they campaigned on this. I got the impression that they were looking for some kind of middle ground, but it is often hard to tell with Select Committee hearings.

We will have to wait for the Select Committee to consider the applications and write their report for parliament.

Tags: letting fees

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