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Rethink letting fees ban

Don’t ban letting fees – instead the option to have a fee should remain and whoever gets the benefit from it should pay for it, investor advocates suggest.

Wednesday, March 28th 2018, 8:00AM

by Miriam Bell

NZPIF executive officer Andrew King

The Government has introduced legislation into Parliament which will ban the charging of letting fees to tenants.

Housing Minister Phil Twyford says banning letting fees will help to improve tenants’ lives while the Government continues with its review of the Residential Tenancies Act.

Twyford has rebutted claims that the ban could lead to higher rents, pointing to Scotland as evidence of this.

However, the NZ Property Investors Federation disputes Twyford’s take on the Scottish letting fee ban.

According to the NZPIF, while one study shows the Scottish letting fee ban didn’t result in rent increases, other studies indicated rents had increased and others were inconclusive.

NZPIF executive officer Andrew King says that rather than banning letting fees, Ireland, Wales and also England (to date) require letting fees to be displayed so costs are transparent to tenants.

“An alternative could be to follow suit and require fees to be displayed, and perhaps allow the letting fee to be paid off over, say, a six month period to reduce the impact of moving costs.”

But, ultimately, the NZPIF believes that whoever gets the benefit of the letting fee should pay it, he says.

“So if a landlord contracts a property manager to find them a tenant but not continue to manage the property, then they should pay the fee because it makes the process easier for the landlord.

“Likewise, if it is hard for tenants to find rental accommodation then the tenants should be able to pay the fee so they increase their choice of property and their chance of securing a rental.”

The NZPIF is also not convinced that banning letting fees will impact on as many tenants as the Government believes.

Ministry of Business, Innovation and Employment bonds data shows that of the 175,081 bonds lodged in 2017, 53.6% were lodged by property management companies.

King says that while a large proportion of those companies would have charged a letting fee, not all would have.

“As owner managers cannot charge a letting fee, that means that more than half the properties let last year did not have a letting fee attached to them.

“That means tenants currently have a choice of whether they pay a letting fee or not.”

Read more:

Letting fees to go 

Rental squeeze to intensify 

« Rents soar in the Super CityNo more negative gearing »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 28 March 2024 9:42am

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