Government to abolish letting fees by Christmas

The Government will abolish letting fees for residential tenancies by 12 December - the middle of the peak tenancy change over period.

Tenants are typically charged several hundred dollars in letting fees by property managers when they take up a new rental, usually the equivalent of one week's rent for the property.

The Government's Bill will prevent landlords from directly passing the cost of a letting fee onto a tenant. It says banning letting fees will reduce the upfront cost of a new tenancy.

Select Committee has recommended the Government's Residential Tenancies (Prohibiting Letting Fees) Amendment Bill come into force faster than originally proposed in order to reduce costs for tenants shifting rentals during the peak period.

"We were advised that tenancy turnover around New Zealand is highest between November and February.

"Our amendment would help to maximise the reduction in costs for tenants who sign up for new tenancies over the peak period," the Select Committee report said.

Housing Minister Phil Twyford told Newshub he supports the recommendation.

"The select committee agreed that letting fees are an unfair and unnecessary burden and has backed my Bill. Our Government supports bringing the date forward.

"This is going to make a big difference for those looking for a new home during the peak house hunting season this summer. This Bill is part of the Government's changes to make life better for renters," Mr Twyford said.

The report also notes a lack of regulation around letting agents, including property managers. "We urge the Government to consider introducing a regulatory regime for this industry," it said.

The National Party raised concerns that the cost of letting fees will be indirectly passed onto tenants through increased rent.

Tenants can still be asked to pay rent in advance, and a bond.