Quinovic introduces new fee after letting fees banned

Quinovic will introduce a new 'tenancy fee' as a replacement for the letting fees that have been banned by the Government.

Property managers typically charge tenants one week's rent when they take up a new rental, a charge that Housing Minister Phil Twyford has said costs Kiwis millions every year.

In October, the Government announced it would abolish letting fees through an Amendment Bill which would prevent landlords from directly passing the cost of a letting fee onto tenants, reducing the new tenancy's upfront cost.

The ban comes into effect on December 12, right in the middle of what's considered the busiest time of year for tenancy change overs.

In an email to property owners, Quinovic general manager Grant Clark said the ban on letting fees would have a "considerable adverse impact" on business.

"Letting fees have historically been charged at the commencement of a tenancy and cover the not inconsiderable time and cost associated with finding and placing new tenants," he said.

"Rather than seek to increase our base management fees we have decided to introduce a New Tenancy Fee."

He said Quinovic would discuss the new fee with property owners before they start looking for new tenants, and the charge would be deducted from the first week's rent of the new tenancy.

Robert Whitaker from advocacy group Renters United says the news is unsurprising, but it will have real ramifications for tenants in the future.

"It is property owners who are the company's customers, they benefit from the service (not renters) and therefore they are also in a position to challenge the fee if it is unreasonable," he told Newshub.

"When rents rise in the coming months, the letting fee ban will be used an excuse - but the real cause will be the simple fact that we don't have enough rental stock in most of our main centres, and the property management companies will take full advantage to 'maximise rental return' for their customers, the owners.

"This is why we need the Government to take the bull by the horns and build more affordable housing and peg rent increases to inflation."

Quinovic has been approached for comment.

In August, Andrew King, head of the Property Investors Federation, told The AM Show that many tenants "ironically actually like the letting fee" because being willing to pay it gives them an advantage over other prospective renters.

He also claimed banning the fees would increase tenants' rent by about $10 a week.