The Government has recently introduced a Bill that, if enacted, would prohibit the charging of letting fees under the Residential Tenancies Act 1986. If the Residential Tenancies Amendment Bill becomes law, the charging of letting fees would be banned, and so would any other fees for services relating to granting, continuing, extending, varying or renewing any tenancy agreement.
When securing a rental property, tenants could still be asked to pay rent in advance, and usually a bond as well. Landlords could still use the services of a letting agent, such as a property management company, but the cost of that service must be met by the landlord. Banning letting fees is intended to reduce the upfront costs tenants face when they move to a new property, and promote fairness among tenants, and if the Bill becomes law, it is expected to take effect three months after it is passed.
While the goal of the letting fees ban is to ensure the costs associated with renting a property are met by landlords rather than tenants, there have been warnings that the move is likely to increase rents. REINZ chief executive Bindi Norwell says banning landlords from charging tenants letting fees might help tenants in the short term.“But, in the long run, it’s likely that these costs may be passed on to tenants via an increase in weekly rent.
“Additionally, it may make tenants with shorter term tenancy requirements, such as students or seasonal workers, less attractive to landlords making it harder for them to obtain rental accommodation.” She adds that, given the current raft of legislation being directed at landlords, this may contribute to more landlords exiting the rental market, further reducing the available pool of rental properties and driving up prices.
Meanwhile, in its recommendations, the Select Committee also urges the Government to consider introducing a regulatory regime for property managers and letting agents – as there are currently no regulations in this area. Norwell, along with others in the industry, backs this call. She says REINZ wants the Government to regulate the property management industry.