Letting fees are another expense tenants may need to pay if they use a letting agent.

Letting fees

Sometimes a letting fee is charged by a letting agent to grant or assign a tenancy.

Letting fees are allowed under tenancy law (Residential Tenancies Act) but only letting agents or a landlord’s solicitor are allowed to charge this fee.

Who can be a letting agent

An agent is someone who has the authority to act for someone else. They take on the responsibilities of that person under the tenancy agreement.

A letting agent is a person who makes a living from renting or managing properties. They are usually a person who works for a property management company.

Some examples of people who aren’t usually letting agents are:

  • private landlords renting out their own properties (unless they manage properties for other landlords)
  • A person who is part of a trust (a trustee or beneficiary of a trust)
  • A person who is the director of a company that owns a rental property

What is a letting fee for

A letting fee covers the cost of putting a tenancy in place. It covers the cost for time involved by the letting agent for things like:

  • holding open homes
  • reviewing applications from prospective tenants
  • preparing tenancy agreements and conducting the initial property inspection

Letting fees can vary, but are normally one week’s rent plus GST.

The tenancy agreement must state whether there is a letting fee. If the tenant signs or agrees to the tenancy, they must pay the letting fee.

A letting fee cannot be charged to renew or extend a tenancy.

Read the Residential Tenancies Act (external link)  on the New Zealand Legislation website.

Key money

‘Key money’ is money (other than rent and bond) a landlord asks the tenant to pay for granting, or making changes to a tenancy.

Landlords are not allowed to charge key money under tenancy law. A couple of  important exceptions are:

  • letting fees (see above)
  • money tenants give to the landlord to hold the property while they decide whether or not to rent it (tenancy law calls this an ‘option to enter into a tenancy agreement’ or an ‘option fee’).

The maximum amount of money a tenant can be charged under an ‘option’ is 1 week’s rent. If they decide to rent the property, the money must be refunded or put towards rent.