Bill passes meaning letting fees will be gone by Christmas

Housing Minister Phil Twyford says abolishing letting fees will reduce the upfront costs to renters, but National says it will lead to higher rents in the long-term. Photo / Mark Mitchell

Letting fees charging hundreds of dollars to new tenants will be abolished before this summer, after a Government bill passed its final reading.

But the National Party is warning that the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill will only lead to higher rents.

The bill, which passed its third reading today with support from Labour, NZ First and the Greens, bans letting fees in an attempt to make landlords meet the costs of letting a rental property, rather than tenants.

The law will come into effect on December 12, in time for the busiest time of year for tenancy turnover.

Housing Minister Phil Twyford has called letting fees "an unfair and unnecessary burden". Currently there are no restrictions on letting fees, which are typically a week's rent.

Landlords or agents that charge letting fees will then face a fine up to $1000, but they can still seek reimbursement from a tenant for expenses for tenant assigning, subletting or parting with possession of their interest in a tenancy.

Tenants can still be asked to pay rent in advance, and a bond.

National and Act opposed the bill, saying it would see higher rents in the long-term and may force some landlords to quit the residential rental market.

National pushed for a way to make letting fees more transparent so that an actual fee for service could be charged.

The Government is also doing a wider review of the Residential Tenancies Act and is considering a regulatory regime.

There are currently no regulations covering letting agents, including property managers, and the select committee report on the bill had concerns about agents checking potential tenants' bank statements.