• Report warns of job losses and costs for long term tenants increasing if letting fee is scrapped in the UK
  • New Zealand cannot ignore report as ‘Crowd Pleasing’ do-gooders push for reforms
  • Time to penalise tenants for late payment fees

A report has recently published in the United Kingdom around the impact of scrapping the letting fee and how it will affect the Property Management industry. This report has raised alarm bells and New Zealand should pay close attention to what it says. The ARLA Propertymark report warns that long term loyal tenants will be forced to pay more and potentially 16,000 jobs in the UK will be put at risk as around 20% of revenue will be lost.

Tenant fees are likely to be scrapped in England and have already been scrapped in Scotland.

The similarities between the UK and New Zealand are apparent as both countries have to deal with an unregulated industry and both countries are seeing a big squeeze on the rental properties as rents have increased to unprecedented levels in many regions across the country.

Scrap the letting fee and scrap the profit margin

As many companies battle with increased costs through compliance with health and safety, the profit margins many companies work to have become smaller. With an estimated 50% of Property Management companies managing fewer than 200 properties, a ban on tenant fees could force many operations into liquidation if they cannot put the cost of the letting fee onto the landlord.

Long-term impact not good

The obvious choice for Property Management companies would be to charge the landlord the letting fee. However, expect this to be met with sharp resistance as landlords have had to face increased costs to remain compliant under the Residential Tenancies Act. These costs will further increase if the Labour backed Healthy Homes Guarantee Bill gets through the house and becomes law. This bill will see standards implemented around heating and ventilation and is currently with a select committee after getting through its first reading.

With increased costs for landlords, the report predicts that if landlords will be forced to take the following steps to recoup the costs passed on to them. This could include.

  • Rent increases on an already overheated rental market.
  • More landlords selling properties and withdrawing from the rental market meaning a further shortage in rental stock.
  • Less rental purchases by investors.
  • Less money being allocated to property maintenance and repairs.
  • A drop in the use of Property Managers in an attempt to save money.

Tenancy advocate Kate Day of Renters United is obviously not a fan of the letting fee.

Tenancy advocate Kate Day of Renters United is obviously not a fan of the letting fee.


The report also highlights that removing the………