Written By: - Date published: 8:44 am, December 12th, 2018 - 56 comments
Categories: class war, Economy, housing, infrastructure, labour, phil twyford, poverty, tenants' rights, workers' rights - Tags: housing affordability, letting fees
Rejoice! The Labour led Government has just removed a completely unfair tax on accommodation renters, ending the practice of rental firms ripping off tenants by charging a bogus upfront ‘letting’ fee. No doubt the Taxpayers Onion will be overjoyed.
Until today, most property management firms charged new tenants a fee for, er, doing nothing. The letting fee, usually equivalent to a weeks rent, was simply a tax on the vulnerable and powerless, levied out of greed.
Tenants already struggling to find bond in advance, usually before any previous bond was returned, will be relieved that the financial burden has been lessened. It is possible that some rents will increase to cover the supposed loss to the agents, however that is still preferable to paying upfront for a non existent service.
Renters United spokesperson Robert Whitaker is in favour:
“The first thing is, they can actually compare apples with apples in the rental market and not have to worry about letting fees being piled on top of all of their other moving costs.”.
Barfoot and Thompson director Kiri Barfoot says they run a business and provide a service, and it doesn’t worry them who pays for it.
“There are costs to find tenants for a property and someone has to pay for it, so if we can’t charge the tenants, landlords will be looking to pay.”
Which raises an interesting legal question. If the tenants pay for this service, doesn’t that establish a commercial relationship between the agent and the tenant? Doesn’t it follow that the agent has an immediate conflict of interest, because they are clipping the ticket both ways?
Minister Phil Twyford’s is upbeat about the change:
“The previous way that these letting fees were handled was totally unfair to tenants. They were hit with one week’s rent plus GST at the very time they could least afford it. When they were having to pay rent in advance and bond and all the costs of moving.”
Minister Twyford doesn’t think tenants will end up paying more.
“Landlords are already charging as much as they can within supply and demand. So it’s not at all clear that because the small minority of landlords who use property managers want to pass on those fees through rent, it’s not at all clear that they’ll be able to.”
The Misery Party’s Judith Collins cheerfully lied about the dropping of the charge, with a bizarre claim about CGT:
“Now that this government is coming in with even more things like a capital gains tax, there’s not a lot of money in it – so that’s why they have to pass it on.”
In the real world, there are no plans to extend CGT, though it is part of the Tax Working Group’s discussions.
All in all, this is a small, but welcome step in the Government’s overall housing plan. Bringing fairness to the rental market by removing a significant financial hurdle for tenants shows that Labour is taking a global view of our accommodation needs and not just relying on the market to self regulate.
With Kiwibuild underway, house prices rises steadying and Housing NZ revitalised, this is the first Government in 40 years to seriously tackle our housing crisis. In fact, this may be the first Government in a generation that does not actively make the problem worse.