APM thought carefully about how we as a property management company will manage the removal of letting fees due to the announcement that the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill was passed in Government and is in effect from 12 December 2018.
Letting fees are associated with the tenant on-boarding process. This process is arguably the most important factor in securing a successful tenancy, and one of the biggest processes we undertake. It can often take 10 hours or more to ensure that we have the best tenants when we hand over the keys to our clients’ properties.
So what has APM done to manage this legislative change?
At APM we believe the most effective, sensible, and transparent way to address the costs relating to the prohibition of letting fees is to target the original purpose of the fee, which is to secure the best tenant at the best price in the shortest period of time.
Only at the time a new tenant is secured will APM Owners now be charged for a Marketing Package. The Marketing Package covers all elements relating to securing new tenants including due diligence such as credit and tenancy tribunal checks, reviewing multiple applications, background checks, bond receipting and lodging, marketing the property, conducting viewings, and providing professional quality photos.
The total cost of the Marketing Package is $440 + GST. With an average letting fee in our company of $575.00, we feel this is a justified and sensible response.
We understand that in this time of changing legislation and increasing compliance costs this is not unexpected. We will always endeavour to minimise the long term effect this new legislation has on our clients by encouraging fixed term tenancies over periodic tenancies, deducting the Marketing Package costs from the first week’s rent, and conducting regular market rent reviews.
More information about the prohibition of letting fees can be found on the Parliament website here: https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_77655/residential-tenancies-prohibiting-letting-fees-amendment