Housing Minister Phil Twyford says he doesn't see any reason why rents should go up when letting costs are transferred back to landlords.
Tenants will no longer have to pay hefty letting fees when renting a new home under a bill introduced to Parliament today.
The bill will make it illegal for letting agents or landlords to charge a letting fee, and allows for damages of up to $1000.
Tenants can be forced
to pay - usually a week's rent - on top of upfront costs of up to four weeks' bond and two weeks' rent in advance to secure a rental property.
Housing Minister Phil Twyford said it was a "bizarre anomaly" that the current law allowed letting agents to charge tenants a fee for services provided to landlords.
"I don't know any other area of the law where two parties can contract for the provision of services then charge a third party," he said.