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Nowhere to run from hidden rental costs

16th November 2018

As of the 12th December 2018, the government are banning all letting fees. This is going to lead to a decrease in revenue for many property management companies and a need to minimize this deficit. This lost revenue will need to be recouped and if the tenant cannot be charged then the owner will.

With this letting fee ban coming into effect, some property managers are preparing to charge property owners a letting fee but labelling it as something different. Pitches have already begun to circulate, educating property management staff how to pitch the new fees.

Justification for charging a letting fee, which is usually one weeks rent + gst has come about through the time taken by property managers for having showings, reviewing applications, preparing agreements and the initial property inspection. This fee is currently charged to the tenant and paid to the letting agent or solicitor. The looming ban has not only property owners concerned but also tenants concerned that their rents are going to rise as a result.

Many property management companies rely on this income stream, which can be approximately 12% of their revenue, however this government ban is not phasing David Pearse, Pukeko Rental Manager’s Managing Director, “we have never charged letting fees to our tenants, so we will not need to charge the owner following this ban. We also do not charge extra for our quarterly inspections or organizing maintenance.” Those property owners who have listed their properties with a company who have not charged letting fees from day 1 can breathe a sigh of relief.

Rental property owners and renters should think carefully about the property management companies that they use. Look for a company who have never charged letting fees and believe that getting the right tenant is critical and manage the properties in a way that tenants want to stick around, therefore minimize affects for everyone involved.


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