On the 12th December 2018, a letting fees ban will be implemented by the NZ government. This has made it illegal to charge letting fees to tenants or to recoup the fee in any other way from a tenant. While the line from the government is all about how it will save tenants up to $47 million each year, the effect it will have on landlords and their property managers has not been explained. We’re here to put that straight.
Why a Letting Fees Ban is Bad News
As Auckland property managers, we spend a considerable amount of time, effort and money on finding the right tenants for our landlord’s properties. Up until December 12th 2018, the cost of this has been the responsibility of the tenant. It will now be the responsibility of either the landlord or property manager.
Letting out a property is an involved task, and one of the biggest process any property management company can take. It includes:
- Visiting the property to take photos (if advertising it for the first time)
- Writing an advert for the property and uploading it to TradeMe & other media
- Receiving phone calls and emails from prospective tenants
- Arrange viewing times
- Showing the property a number of times to prospective tenants
- Assessing applications from prospective tenants
- Undertaking reference and credit checks on prospective tenants
- Re-doing the process should the tenant be unsuitable
- Contacting the landlord to introduce the new tenant
- Preparing the tenancy agreement and bond lodgement form
- Signing up the new tenant and obtaining bond and first weeks payment in advance
Finding the perfect tenant takes time and is something property managers like us pride ourselves on. The issue is though, that the cost for these tasks is not absorbable by responsible property managers, which will see it passed onto landlords.
Consequences of the Letting Fees Ban
As a result of the letting fees ban, experts in the industry are predicting that many landlords will exit the property market, short-term tenants will be less attractive, weekly rents may increase, and the quality of selected tenants will drop.
From December, we will be passing on the costs of letting a property to our landlords. We feel that any property management company which does not charge letting fees to its owners and attempts to absorb the cost themselves, will not do well. They will be unable to sustain a viable business and simply take any client who applies, without considering the quality of the tenant. It will become a matter of fill the vacancy with a minimum of effort and cost, to the landlord and their property’s detriment.
We welcome the opportunity to discuss this with our current and potential landlords and explain the importance of our letting service with you.
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