The Prohibition of the Letting Fee

The Prohibition of the Letting Fee

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Prohibition of the Letting Fee

If you’ve been keeping up to date with the latest occurrences in parliament, you would have noticed that the latest amendment bill is associated with the prohibition of the renowned letting fee. The Bill proposes that no person, including property managers, can require a tenant to pay a letting fee, or any other fee, in relation to a tenancy.


For further reading, HERE is a link to the parliamentary bill.

In accordance with Norwell; the letting fee is essentially the payment from a group of tenants which covers the costs of property inspections, advertising, viewings, background checks on tenants, liaison with landlords and processing the tenancy agreement. It is understandable that this payment is impacting tenants; with the proposed amendment, the cost is now looking to shift to property owners instead.


From a Wellington perspective, it is evident that the market is currently in high demand, not only for housing, but rentals too. As is common economics, the higher the demand, the higher the price – it is therefore only justified that the price of accommodation is increasing. With the prohibition of the letting fee, are you prepared to front the payment? Will the letting fee then be included in rental payments?


From the view of Phil Tywford; he did not expect rents to increase with the prohibition. Instead, his opinion is that landlords will be the ones to incur the cost. This coming shortly after the implementation of insulation costs, smoke alarm testing, meth testing and asbestos inspections may have you as a landlord concerned. Well, your pocket at least. We’ll quickly return to a few of our previous posts;


– As we currently know, from April 2018; the properties held in tenancy will require an asbestos register if there is potential that the property is at risk of asbestos – something that is well overdue. As always, we’re looking out for our property owners as well as our tenants; this is a huge concern for us and something that we’ll be monitoring very carefully. We’ve been teaming up with our local Wellington Asbestos removal specialists to ensure we’re ahead of the ball on this one. This is one of the latest amendments to incur an additional cost to property owners.


– Following up, we’ve informed you of the smoke alarm alterations which are in effect as of the 1st of July. This will see every house to have smoke alarms that are installed and functional. These alarms will require long life batteries as well as a photoelectric sensor. In spite of the additional costs, tenants will be required to replace worn-out batteries in the smoke alarms and will need to inform the property owner of any issues.


– In addition, insulation statements are compulsory on all tenancy agreements signed since 1 July 2016.  The landlord must disclose whether there is insulation in the rental home, where it is, what type and what condition it is in, so tenants can make an informed decision. Ceiling and underfloor insulation will be compulsory in all rental homes from 1 July 2019 where it is reasonably practicable to install. It must comply with the regulations and be safely installed.


– Finally, the Bill surrounding methamphetamine includes a regulation-making power to make regulations to prescribe a maximum acceptable level of methamphetamine for premises (above which the premises can be said to be “methamphetamine-contaminated”), the way in which methamphetamine testing should be carried out and the decontamination process required for certain purposes.


Could we be seeing a complete reform of how property owners are now investing?


Click HERE to make a submission today, The closing date for submissions is midnight Wednesday, 23 May 2018.


The New Zealand Property Investors Federation (NZPIF) took a different spin on the amendment. The logical thinking from their end was that; rather than banning tenants from paying the letting fee, whoever had the most benefit from the transaction would be covering the cost.

For example; “If a landlord contracts a property manager to find them a tenant but not continue to manage the property, then they should pay the fee. Under the current system, if it is difficult to find a tenant, landlords will often pay the fee to make the process easier,” the NZPIF said in a statement.

“Likewise, if it is hard for tenants to find rental accommodation (as it is at present) then the tenants should be able to pay the fee, so they increase their choice of property and their chance of securing a rental.”


This clearly has a dramatic impact on property owners, as it plays a large role in the diversity and structure of one’s portfolio. Uncertainty is spurring from this amendment and with good reason. Whatever the outcome on the alleged changes; Quinovic Wellington Regional Property Specialists is committed to working for our property owners. We can assure you that whatever the impact on you, we will work with you to recover any costs if the letting fee is passed on to you as the landlord.

If you’d like to discuss the possibility of the abolishment of the letting fee, feel free to contact Alex for a chat!