Should people with more money be given priority when applying to rent a home from a landlord? That's the question the NZ Property Investors’ Federation (NZPIF) is raising as it fights to keep the practice of 'letting fees' – an arbitrary payment demanded by some landlords via letting agencies.
The government is looking to ban the practice in law, but the NZPIF doesn’t think legislation to prohibit letting fees is needed. In fact, they claim some tenants will be discriminated against because they want to pay it.
Andrew King, executive officer of NZPIF, says: “Our view is that whoever gets the benefit of the service should pay for it. Sometimes, like now when it is difficult to get a rental property, it is the tenant who is getting the benefit.”
The organisation, which represents property owners, says that last month 46 per cent of new lettings were by owner managers who, it says, cannot charge a letting fee. Although anecdotal evidence paints a slightly different picture. Sometimes a letting fee is called a finders' fee or a reward…
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King says that by prohibiting letting fees, tenants who are prepared to pay the one-off payment to get a step ahead of other tenants will be disadvantaged.
“By paying the letting fee they have a wider choice of property and less competition from tenants unwilling or unable to pay,” he says.
“It is possible that those tenants previously willing to pay a letting fee may turn to offering a higher rental in order to put themselves ahead of other tenants. So we could see an increase in rental auctions initiated by these tenants.
“This proposed policy of prohibiting letting fees will probably not have the same dramatic effect on rental prices as ring fencing losses, increasing the bright line test or a capital gains tax, but it will have some effect.”
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