Tenants 'ironically' like letting fees - landlords

A group representing property investors says renters like letting fees, because paying them gives them an advantage over other potential tenants.

Andrew King, head of the Property Investors Federation, told The AM Show getting rid of them - as the Government is expected to do - will make rents go up about $10 a week.

"A lot of tenants ironically actually like the letting fee. At the moment around about 50 or 60 percent of properties available for rent don't have a letting fee. You don't have to pay a letting fee if you don't want to.

"But if you are a tenant and you want access to 100 percent of all the properties available and you're willing or able to pay a letting fee, you can get that access."

Andrew King.
Andrew King. Photo credit: The AM Show

Later on Monday morning Housing Minister Phil Twyford and Green Party co-leader Marama Davidson will announce the Government's proposed changes to the Residential Tenancies Act.

"Our laws are archaic and give so few rights to renters," Mr Twyford told The Spinoff last week. "There's so little security of tenure. And when there's a shortage of rental properties, like there is now, that puts all the bargaining power in the hands of landlords."

Landlords don't see it that way. Mr King said the Government's proposals are likely to result in fewer rentals available to Kiwis who can't afford to buy.

"We need laws that actually encourage people to provide rental properties in New Zealand. We do not need any laws that make it harder and more expensive to provide rental properties. Tenants will not thank them for it."

Research earlier this year found 72 percent of renters want letting fees banished.

Based on what Labour promised ahead of last year's election, Mr King expects rents to rise about $20 across the board.

"The Government has already done a bunch of well-meaning things in terms of healthy things, taxes and the like on landlords. What do the landlords do? I'll tell you what they do - they pass the cost on to the poor old renter. So by being kind, they're being cruel."

He said people will complain, but it's just the way it is.

"People keep saying, 'You'll always say the rent goes up,' but the fact is that it does. We do [say it] because it always does."

Both he and National Party leader Simon Bridges say rents have risen by up to $20 on average since Labour and New Zealand First took power.

According to Trade Me's rental price index, rents nationwide climbed 6.7 percent in the year to June to $480 a week - that's an increase of about $30. Rents rose fastest in Gisborne, the West Coast and Hawke's Bay. In Auckland they were up 3.8 percent to $550 - up about $20.

QV's numbers are slightly different, having rents up 5 percent in the past year to a median $420 - up $20.

Simon Bridges.
Simon Bridges. Photo credit: The AM Show

One of the expected changes is to prevent landlords from raising the rent more than once a year. Mr Bridges said this will result in huge hikes.

"Every time that period comes around, you say, 'Right - lift it real high because we won't get a chance for 364 days.' I don't think this will help renters. I think it may well hurt them even more."

Mr King however said this is one of the changes landlords are least concerned about.

"A lot of landlords are ordinary people, and they don't like putting rents up a lot of the time. But what they do tend to do is when the tenant leaves, they then put the rent up. It could be two or three years."

If tenants feel their rents are higher than the market rate, the Ministry of Business, Innovation and Employment says they can apply to the Tenancy Tribunal to have it reduced.