22 March 2018

The Government has introduced a Bill that, if enacted, would prohibit the charging of letting fees under the Residential Tenancies Act 1986.

Letting fees are currently charged to tenants by letting agents to cover the cost of finding a tenant for a property, such as the cost of time in holding open homes, reviewing applications, preparing tenancy agreements, initial property inspection, etc.

Property managers are usually letting agents, and so are some solicitors.

Private landlords who do not use a letting agent cannot charge letting fees to tenants.

If the Residential Tenancies (Prohibiting Letting Fees) 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. Read more about rent and bond

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.

Key money, which is money the landlord demands from tenants to secure a tenancy, is currently prohibited under the RTA. However, an exemption to this allows letting agents or solicitors to charge a letting fee.

Banning letting fees is intended to reduce the upfront costs tenants face when they move to a new property, and promote fairness among tenants.

If the Bill becomes law, it is expected to take effect three months after it is passed.

The Bill proposes that anyone who charges a letting fee could be ordered by the Tenancy Tribunal to pay exemplary damages of up to $1000.

Read Minister Twyford’s statement (external link) on the Beehive website. 

Read more about the Bill (external link) on the HUD website.

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