The Government has introduced legislation to Parliament to prohibit a landlord, letting agent, property managers, solicitor or other person from charging a tenant with any fee in relation to letting a residential tenancy.

Currently fees are allowed to be charged to tenants to cover the costs of listing and advertising, open homes and vetting tenants.  This means that the tenants are paying the landlords costs despite the benefit of those services being for the landlord.  The purpose of the legislation is to put those costs back on the landlords rather than tenants and reduce the upfront costs for tenants in renting a new property.

The Bill prohibits a letting fee or any other fee to a tenant relating to the:

  • Granting, continuing, extending, varying or renewing of a tenancy agreement; or
  • Assigning of a tenant’s interest; or
  • Subletting the whole or part of the premises.

Landlords can charge existing tenants for reasonable expenses incurred if the tenant seeks consent to assign, sublet or end the tenancy early.

The Bill introduces a maximum penalty of $1,000 damages for a breach by any person.  These damages are in addition to any compensation ordered e.g. refunding the letting fee charged.

If the Bill is passed into law it will come into effect three months after it is signed by the Governor-General.  Prior to that time letting fees paid or agreed to will be enforceable.

Alan Knowsley
Partner
Wellington