MPs back ban on letting fees

Sharechat reports that MPs have supported the ban on letting fees… although which MPs support this is in question. quote:

A ban on letting fees for tenants could be in place as early as December to protect renters during the peak summer period.

Under the present legislation, landlords can charge one-off letting fees, with no maximum, ostensibly to cover tenancy-related costs like viewings and background checks. However, they often charge a full week’s rent, regardless of what the costs were. end quote.

Charging one weeks rent has been standard for decades. Suddenly, that is not acceptable. Yet it is a reasonable measure. If the tenant cannot afford one week’s rent as a letting fee, they probably can’t afford the rent either. quote:

Parliament’s social services and community select committee recommended implementing a ban on Dec. 12 so as to cover the seasonally high period of turnover among rentals between November and February. end quote.

Which is, of course, the time of year that most people move house if they are tenants. People who change jobs or move into other areas almost always do it shortly after Christmas. quote:

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

The coalition government has a majority on the committee and recommended the House pass the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill, which shifts the letting fee burden to the landlord rather than the tenant. end quote.

Most of these fees are actually charged by a property manager, not the landlord himself. So what happens to property managers here? They have to charge the landlord, one way or another – right? quote:

The committee, chaired by Green MP Gareth Hughes, also recommended the government consider introducing a regulatory regime for letting agents and property managers, as part of its wider review of residential tenancy law.

“We were concerned to hear about property managers checking potential tenants? bank statements and to learn that nothing in the act prohibits this,” it said. end quote.

Gareth Hughes. Say no more. So property managers are now in their sights. You know the ones that look after your rental property, and (hopefully) stop your tenant from wrecking the place or failing to pay the rent? Now they are going to be regulated. I think we all know what that means. quote:

Opposition National MPs issued a minority view opposing the bill, saying it failed to recognise that costs will spill over into increased rents.

“The unintended consequences could be that landlords charge more weekly rental than they otherwise would and/or that landlords decide to quit the residential rental market and either sell, or turn to long-term Airbnb for the property, thereby avoiding all obligations of the Residential Tenancies Act,” they said. “An alternative is to make letting fees more transparent so that an actual fee for service could be charged.” end quote.

Come on, National. You can do better than that. How about coming out and saying… no. Landlords need their properties to be protected. We will stand up for landlords and property managers?

Nope. Not interested.? quote:

In the bill’s first reading, Housing Minister Phil Twyford said a ban on letting fees could save renters up to $47 million a year, and that the charges were unfair and had no economic rationale. end quote.

Yes, Phil. Keep looking after your tenants. Soon, they will all be living under a bridge. If you keep up with your landlord bashing policies, very soon, you will have no landlords left to bash. This is the law of unintended consequences. Keep beating someone with a big stick, and either they will bite you back, or they will simply vanish into the woods.

Gareth Hughes and Phil Twyford still seem to have no idea what they are doing to the rental property market. This is really going to hurt. But even on a slightly reduced selling market, things still look good for landlords wanting to exit and take their tax-free profits with them.