Letting fees set to be outlawed by Christmas
Tenants in New Zealand should receive an early Christmas present with letting fees set to be outlawed by December 12.
As promised, the Labour-led Government will outlaw the practice that allows a property manager to charge one week’s rent for assigning a tenant a rental property.
The final report by the Select Committee says that time is of the essence and passing the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill will be to the benefit of thousands of tenants.
“We were advised that tenancy turnover around New Zealand is highest between November and February. Our amendment would help to maximise the reduction in costs for tenants who sign up for new tenancies over the peak period,” the report says.
The report also indicates that this cost will invariably be passed on the landlord.
“The Bill aims to ensure that the costs associated with letting a rental property are met by the landlord, rather than the tenant. It also seeks to reduce the upfront costs faced by some tenants when renting a property.”
However, in the report, the National party warns “the bill fails to recognise that the cost will have to be passed on to the tenants by way of increased rent.”
Exemplary Damages & Charging for Lease Breaks
The bill would make it an unlawful act to charge a tenant a letting fee, with a maximum level of exemplary damages set at $1,000.
Landlords or property managers could still seek reimbursement from a tenant for expenses reasonably incurred as a result of a tenant assigning, subletting, or lease breaks.
Tenancy.co.nz consultant Scotney Williams says this figure will be at the discretion of the property manager or landlord and could include costs for time and credit checking.
“If the (property manager or landlord) does (a lease break) on time and attendance basis they will never be wrong,” Williams said.
“And if they’re charging for credit checks and background checks as well the Tenancy Tribunal will unlikely say that is unreasonable.”
The next stage in the legislative process is the Second Reading, with no date confirmed yet.