New legislation – No letting fees for tenants

What’s a letting fee?

Letting fees, Insulation, Healthy Homes Act, Ring fencing of losses….and so it goes on – owners’ pockets are being hit more than ever before. As of 12 December 2018 it became an offence for property managers to charge tenants a letting fee.

What’s a letting fee? A letting fee was a fee charged by property managers/letting agents to cover the cost associated with finding and placing a tenant. Generally, one weeks rent plus GST was paid by the tenant.

Now that tenants won’t be paying, how is it going to affect me as an owner?

The cost of securing a tenant will now be a cost to the owner instead of the tenant. There are two different types of owners looking for tenants.

Owners who self-manage their property and have used a letting agent to find a tenant. They then manage the property themselves, this service is generally called a tenant finder service or casual letting service. Many companies that up until December provided this service will now cease to offer the service due to the costs involved. It takes anywhere between 10-12 hours to advertise, conduct the viewings, secure the tenant and complete the paperwork so for many companies who concentrate on managing properties this will not prove viable unless owners agree to pay a fee for the service.

At Renthub we believe that securing a quality tenant who has been properly credit and referenced checked is THE most critical key to ensuring a happy tenancy. We realise there is a need for this service and we will continue to provide the service for self-managing owners.

Owners who have their property managed and leave it up to their property manager to find the tenant. Property management companies have been discussing many different options for how they will charge the letting to the owner

  • Paying a fee equivalent to one weeks rent plus GST each time the property is let
  • Pay an additional monthly flat fee in addition to what they already pay. This is to spread the cost over the year so that the owner doesn’t get hit with a week’s rent to pay as the letting fee at a time when they could also be faced with a week or two of vacancy between tenants.
  • Pay a letting fee of one weeks rent plus GST capped at x
  • Increase the management commission by xx% and charge the owner 50% of the letting fee equivalent to one weeks rent plus GST

Some companies have said they won’t be charging the owner a letting fee. Traditionally 20 to 30% of a company’s revenue is generated by this fee so if this cost is to be absorbed then it can’t help but have an effect on the efficiency of the office, more stress on the staff, property managers asked to conduct the viewings instead of having a specialised letting agent, service compromised due to revenue being less.


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