The ban on letting fees: Where we stand
Letting fees were a topic of discussion in 2018 and in early November the Government announced they would prohibit property managers from charging a letting fee to tenants. The ban started on 12 December, however prior to this date, many property management companies announced that they would still need to charge some type of letting fee. This letting fee would be charged to the property owner rather than the new tenant.
Nice Place was, until the ban, charging letting fees as a part of our full-service tenant selection process to recoup some of the costs associated with facilitating the new tenant’s application. It takes a lot of time to go through applications, setting up viewings and running credit checks to make sure we get the right tenant for that property. We estimate it takes between 10 – 15 hours per property to find new tenants, and like any service, this has a cost associated with it.
When other property management companies announced they would be charging landlords, most of them said it would be a flat one-off fee of around $500 or more, no matter what the weekly rent is. Nice Place has chosen not to do that and instead we have come up with a solution that we think is fair to landlords.
As of 12 December 2018, a change in tenant will incur a rent-related fee, which is based upon the properties weekly rent. This fee is however capped at $500 + GST, and dropped for the lower priced rents to a minimum of $300 + GST
We believe that this approach works best, as it reflects the individual properties. We don’t believe that this new fee calls for a rent increase like some in the industry have predicted. Rents in Wellington are growing at a steady rate already, which are proving strong returns for investors.