A Wellington student who was charged more than $1400 to change flatmates says he's relieved the property manager has backed down.
A property manager had charged students $1400 to change the names of flatmates on a tenancy agreement. Photo: 123rf
A property management company, which charged some Wellington students a "letting fee" of more than $1400 - their second in four months - to change a couple of names on the tenancy agreement said it was a mistake.
However, tenant advocates say extra fees like this were not uncommon - and showed the sector needed tougher regulations.
Finn Carroll and his flatmates signed the lease on their inner-city Wellington pad in February, and paid property manager Oxygen a letting fee on top of their bond and rent in advance - about $7000 in total.
When Mr Carroll told Oxygen he would be replacing two of his flatmates who moved out recently, he got this response via email:
"To add a new tenant to a tenancy requires a lot more work and inevitably a letting fee will need to be paid (1 week rent + GST)."
The 19-year-old said he and his flatmates, who are all students, were shocked.
"To add on two new flatmates, we were hit with this massive fee of $1437.50," Mr Carroll said.
"It was crazy. We didn't even know if it was legal, to start off with."
However, since their story hit the media yesterday, he received an email from Oxygen today apologising for what they called "an outdated policy" and saying it would be amended to a much more modest "administration fee" of $250.
In his case, it was being waived as "a gesture of good will".
Mr Carroll said he was relieved - but suspected others might have been ripped off.
"It makes you kind of wonder doesn't it, if there have been lots people who haven't chosen this route of going to the media and talking to other people - they've just bent over and paid it," he said.
"It doesn't seem like a very fair practice. So it's been changed at Oxygen at least, but hopefully a lot of other property managers will follow."
Oxygen's general manager Christian Casbolt told RNZ the property manager correctly consulted the manual - but the manual was wrong.
"Charging another letting fee was clearly excessive," Mr Casbolt said.
"It was simply a mistake that hadn't been picked up."
He could not say whether other tenants may have been wrongly charged for updating the names on their tenancy agreements but he had asked his team to look into it.
The manual was being updated, and he had told staff they had discretion in such cases to ensure tenants were being treated equitably.
The government planned to ban property managers from charging tenants a letting fee or any other fee in relation to a tenancy.
However, a tenants' advocacy group warned the new law would have to be rigourously enforced or else fees and other admin charges would sneak back in under different guises.
Renters' United spokesperson Kate Day said the solution was to license property managers, so the market could be properly regulated.
"We see many renters struggling to have even their current level rights enforced because it relies on tenants having the confidence to take a landlord to the Tenancy Tribunal, and that's a really arduous process," Ms Day said.
Otago University Wellington public health researcher Lucy Telfar-Barnard said apart from a bond to cover potential damage and rent in advance, it was hard to see how property managers were justified in charging tenants extra fees.
"The service they're providing is a service to landlords. It's not really a service to tenants. And the landlords pay the property managers to manage after the property on their behalf. When a private landlord manages a property, they carry those costs themselves," Dr Telfar-Barnard said.
The select committee would hopefully recognise the risk of property managers sneaking in new fees and close up any potential loopholes, she said.
Mr Casbolt said he was "generally supportive" of the proposed changes.
However, administration involved in letting and managing a property did cost money "and someone has to pay for it", he said.
Ultimately, it could mean landlords would put the rent up, he said.
The Social Services Select Committee is considering submissions on the Residential Tenancies Amendment Bill.
It is due to report back to Parliament by 5 October.
