Parliament signs off key money bill

The Residential Tenancies (Prohibiting Letting Fees) Amendment Bill went through Parliament’s third reading stage on Wednesday, and now awaits royal assent.

The bill amends the Residential Tenancies Act 1986 to prohibit the charging of a letting fee, or any other fee charged to a tenant, in respect of charges for services rendered by a letting agent, solicitor, or any person in relation to a tenancy.

It doesn’t apply to existing letting fees – or key money.

The Real Estate Institute warned that the prohibition might lead to an increase in rental prices in the long run.

The institute said in its submission to the select committee that, while the ban would reduce fees upfront, “which contradicts the purpose of the ban, which is to reduce costs and improve fairness for tenants”.

Institute chief executive Bindi Norwell added: “Additionally, our concern is that it may make tenants with shorter-term tenancy requirements, such as students or seasonal workers, less attractive to landlords, making it harder for them to obtain rental accommodation.

“We’ve said this before, but we think a better way to look after renters is to regulate the property management industry rather than focusing on smaller issues such as banning letting fees. We don’t want New Zealand to continue to be an outlier – instead we need to follow the good example set by countries including Australia, the UK, Republic of Ireland, the US & Canada, and ensure that our property market is regulated. This is one of the key ways we can ensure that we’re improving the lives of renters.”

Along with that suggestion, she listed the numerous other legislative changes facing landlords:

    • Removing insulation grants and instead making them available only to low-income families
    • Extending the notice period a landlord must give from 42 days to 90 days
    • Introducing the Healthy Homes legislation, which comes into force on 1 July 2019, providing for landlords to face a $4000 fine if they don’t meet the requirements on time – “yet there is still no clarity on what is required under this legislation, giving landlords less than a year to meet the new requirement”
    • Ending the cancellation of tenancies without cause, and
    • Limiting rent increases to once a year.

Attribution: Parliament, institute release.

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