Property managers will be able to compete with the real estate industry in charging letting fees.
The change is included in the Residential Tenancies Amendment Bill which was reported back to the House from the social services select committee earlier this week.
"We consider it unfair to property managers that real estate agents should retain the exclusive right to charge tenants letting fees," says the report.
The changes allow all ‘letting agents' to charge letting fees.
"We believe that this amendment would allow real estate agents and property managers to compete more equally in this area, and, importantly, might result in a decrease in letting fees because of increased competition.
"Some of us also consider that allowing all letting agents to charge letting fees would provide more choice for landlords and tenants by increasing the range of providers of residential letting services."
The select committee report notes that this could possibly result in reduced choice for people unwilling to pay a letting fee, but says "some of us believe that this is outweighed by the advantages of property managers competing with real estate agents."
The original bill, introduced by Labour last year, included a provison for letting fees but confined them to real estate agents.
Labour's position has since changed. It supports property managers and others being allowed to charge letting fees but says the fees should not be paid by tenants.
"We believe this would be most fairly achieved by a prohibition on the charging of letting fees to tenants. ...Labour believes there are many advantages to amending the Act to prohibit anyone from charging a tenant a letting fee," says the Labour minority report.
Instead the landlord should pay, Labour MPs say.
"Landlords choose whether to advertise their rental property with a real estate agent or do so privately, so it seems only fair that those landlords who choose to advertise through a real estate agent should pay the letting fee in the same way that a vendor who sells property pays the agent a commission regardless of the state of the housing market."