No Letting Fees – For You Or The Tenant
The Residential Tenancies (Prohibiting Letting Fees) Amendment Act has now been passed to remove letting fees for tenants who rent homes. Letting fees are normally the equivalent of one week’s rent (excl. GST) and paid at the beginning of a tenancy as an upfront cost to the property manager. From 12 December 2018, tenants cannot be charged letting fees.
As you can imagine, letting properties is a very time consuming job – fielding enquiries; travel to the property for viewings (generally twice a week until let); signing up tenancy agreements; collecting bonds; lodging bonds with the Ministry of Business; returning to the property for the Tenant introduction to moving in. That’s many hours of work.
As a result of the legislation, overnight property managers across the country have had a significant portion of their income eliminated, but are still contracted to do the work. It seems most companies are going to charge the owner the letting fee. Point Property will not be charging you, our owners a letting fee. Instead, we will charge a small administration fee of $15 per month. The benefit of this approach is:
- You know what your cost is going to be. Imagine being in a situation where a new tenant gives notice – then you are up for another letting fee in a short period of time. With the admin fee, you know with certainty what the cost will be. Statistics show that the average tenancy is changed every two years, therefore your costs will be much reduced.
- It smooths your cash flow – when you have a change of Tenant, it usually comes with a week or so of lost rent. If you then have to add a letting fee to that, this is an unwelcome hit to your cash flow.
- This will take effect from 1 January 2019
- The amount will simply be deducted from your monthly payout
If you have any queries or would like to discuss this, we would welcome your phone call. We’d suggest you start by calling your property manager or alternatively you can call Louise Tanner, Operations Director.