Whanganui property managers will continue to charge letting fees until the law changes next month.

Letting fees will be illegal from December 12. Tenants who sign an agreement before that date may still be charged a letting fee even if the tenancy starts after the 12th.

Typically letting fees are valued at one week's rent.

Landlords Link managing director Tracey Onishenko said her company would keep letting fees in place until the day they became illegal.


But, she said her company hadn't decided whether to recoup the money some other way.

She said property owners paid them the equivalent of one week's rent to help with finding the right tenant.

"To be honest we've always done that - our owners have always paid that.

"So it's going to be no different in that instance for our owners.

"We'll suck it up for a little while for our current clients ... until we decide what we think is fair."

She said it was unlikely rents could increase to make up for the letting fee.

"I don't think they [rents] can get too much higher than what they are to be honest. I've seen some ridiculous prices on houses that it's just not worth it. We're just trying to make them fair at the end of the day."

Property Brokers' divisional manager Robin Congdon said the company would stop charging letting fees from December 7 to avoid any accidental crossover.


"We are going to pass the cost of establishing a tenant into a property on to the owner.

"It's quite an involved service - a lot of time, resource and software costs that we incur to do that - so it's not something that we can just absorb. Our business model, our fees have never been set at a level that would include that cost.

"The Minister [Phil Twyford] acknowledged that the cost would be passed on through increased rents where market forces allowed. To act in our owners' interests we will try to recover the letting fees through increased rents over a 12-month period."

Congdon said the time and resource spent getting a property to the market - photos, booking viewings and processing applications to name a few - were all tasks covered by the letting fee and benefited the tenant.

Ross Watson from The Watsons Real Estate said they hadn't decided on a policy yet but it was likely the letting fee would turn up in increased rents.

"I think Twyford's got it wrong and he's promoted it as putting money back in the tenants' pockets," Watson said.


"I can see if the agencies are going to pass that fee on to the landlord - which I think a lot of them will - they'll charge the landlords for a letting fee. I can see the rent going up by $10 or $20 a week."

He said scrapping letting fees was more legislation that would make it harder for landlords to operate.

"There's been so much legislation over the last nine months, 10 months about changing requirements for rentals. Ventilation, heating, letting fees ... the landlord can only suck in so much.

"You've got to remember a lot of these landlords are only mum and dad investors. It's not geared up ... as a huge profit making venture for them. Their money is made very much long term.

"You can't keep expecting mum and dad investors to keep sucking all the additional costs."

Watson predicted a lot of landlords would give up owning a rental property and that would reduce stock.

"The more changes you make and the quicker they're made, it will scare people away and we're seeing that now."


"A lot of mum and dad investors are just going 'I don't want to be part of it because it's the unknown. We don't know what else is coming in'."

The latest Trade Me Rental Price Index had the median weekly rent in Whanganui at $330, up $30 on the year before.

A small one to two-bedroom house now has a median rental of $282.50 (up from $250) and a medium-sized three to four-bedroom house is $360 per week (up from $342.50).