Letting fee changes for New Zealand

New Zealand abolishes letting fees for tenants from 12 December 2018.

As of 12 December 2018, property managers cannot charge letting fees to tenants. That's because New Zealand's parliament has just passed The Residential Tenancies (Prohibiting Letting Fees) Amendment Act.

Under the Act, charging letting fees to tenants will be an ‘unlawful act’, and penalties may apply. So if this is news to you, or you would like to find out more, we recommend reading ‘No More Letting Fees for Tenants’, published by the NZ Ministry of Business, Innovation and Employment’s Tenancy Services.

As such, if you're a property manager or principal in New Zealand, here's what you can do to adapt to these changes.

Option 1: Charge the letting fee to landlords

If you intend to charge letting fees to landlords or owners, you can process letting fees in Gateway by following the below steps.

N.B. Do not use the Letting Fee option when receipting money. Because historically only tenants were charged letting fees, this option will continue to automatically charge tenants the fee. We don’t want that.

1. Navigate to Transactions > Payment.

2. Select either Journal or Pending Payment in the top left drop-down box.

3. Click Creditor button > Select the letting fee creditor.

4. Click the Transactions drop down button. Go to ‘More’ in the details field, then select the property that the letting fee relates to.

5. When the Balance and Transaction screen appears, add in both the full amount to be charged, including GST, and a description of the letting fee in the Details section. Press OK.

6. Once you are happy all details entered are correct, please OK again to process the fee.

Option two: don't charge anyone letting fees

You could consider adjusting fees and commission to account for the loss of income from letting fees.

However, whether you decide to charge letting fees to landlords or not, we also recommend you take the time to remove the Letting Fee from your Tenant and Property files. This will ensure you don’t accidentally charge tenants for it. When you take this action, you will also completely remove the ability to charge for this kind of fee.

Remember though: removing the letting fee from the property will also remove this as a default amount for any new tenants you create for the property.

To remove Letting Fees from your files

1. Open the Tenant or Property file.

2. Click on the details tab, and find the letting fee in the top right-hand side.

3. Remove the number from the field, then save and close. DONE.

We expect these legislative changes to be reflected in Gateway in the future.