4 Jul 2018

Letting agents will get creative with fees, MPs warned

7:13 pm on 4 July 2018

MPs are being warned letting agents and property managers will get creative and charge other costs to tenants if letting fees are banned.

The Beehive

Photo: RNZ / Richard Tindiller

Submissions are being heard at Parliament on the government bill that would prohibit the charging of a letting fee or other fees to a tenant.

A Wellington woman who's battled through the Tenancy Tribunal shared her experience at select committee today, and said the legislation needed to be clearer.

Kate Day said it currently does not include specific language to say a tenant can not be charged any other fee on top of rent and bond, but it should, or else letting agents and property managers will get creative.

She said in the last few years there have been a number of new fees turn up.

"Changing in tenant fees, other kinds of administration fees, the break lease fees that I mentioned, pet bonds which are sort of a fee.

"And these kinds of fees are not mentioned in the lease, so you can sign up with a property management company then they make up a new fee, then when your situation changes they can charge it to you."

The committee also heard from the New Zealand Council of Christian Social Services, whose submission outlined the disproportionate cost of letting fees on vulnerable New Zealanders.

Policy advisor Paul Barber said half of our population - more than two million people - were renters.

"Most people living in poverty are renters, very few of the wealthiest and high income earners are renters.

Two thirds of people with Pacific ethnicity rent, while less than one third of people with European ethnicity rent," he said.

"Seven out of ten children living in poverty are in rental housing and they're likely to spend most of their childhood there, in a rental household."

"If you live with a disability you're 20 percent more likely to be renting than someone without a disability."

Mr Barber said not only are New Zealand's most vulnerable more likely to rent, they're also more likely to move around more - meaning they'll be charged letting fees and other property management costs more often as well.

The committee also heard from the Wellington Community Justice Project, a group made up of law students who say letting fees are a major cost barrier to their peers.

The group also took issue with the transparency of these costs, as the reason for the charging of letting fees and other tenancy costs are too often not disclosed.