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Rental property company Barfoot & Thompson hikes tenant change fee 140 per cent to $400

Auckland property giant Barfoot & Thompson has raised the fee it charges renters when they want to get a new flatmate in by more than 140 per cent, despite other agencies doing the same thing for free.

According to emails seen by 1 NEWS, renters needing a change of tenant form processed - when one person leaves and another moves in to replace them on the tenancy agreement - were being charged $172.50 as of March last year.

As of March this year, the price quoted to tenants has more than doubled to $417.05.

Tenants are forced to either pay the fee or remain on the tenancy agreement, as the company needs to sign it before Tenancy Services will process it. Tenancy Services itself does not charge a fee to process the form.

A tenant in a Barfoot & Thompson-managed property, who wished to remain anonymous, told 1 NEWS the fee is "outrageous".

"We told our property manager we had changed a tenant earlier this year and got told we needed to fill out the form and pay more than $400, despite us having already done most of the work in finding a person on TradeMe," they said.

"It's outrageous. We feel like it's a rip off, but we have no choice."

A Barfoot & Thompson property manager told the tenant the fee was to cover the cost of background checks on the new tenant and administration costs.

Instant background checks are available online from New Zealand companies for as little as $40.

Property management companies are already paid by the owner to manage a property on their behalf, and on Barfoot & Thompson's websitethe company says finding a tenant and doing "interviewing, screening and credit and reference checks" are a component of the service.

Barfoot & Thompson's rate for managing a non-furnished property is 8.5 per cent of all the money collected from tenants, including rent, and it manages more than 15,000 tenancies.

Barfoot & Thompson General Manager of Property Management Samantha Arnold defended the fee, calling it "an industry standard".

Other Auckland property management agencies spoken to by 1 NEWS either do not charge a fee, or charge up to $120 to do the same thing.

"A change of occupancy is not simply a case of filling in a form - we must treat it in the same way we would an end of tenancy and effectively enter a new legal agreement for the remaining and new tenants," Ms Arnold said.

"There are a number of costs carried by the company in this process, not limited to staff time, administration and sundry expenses, and fees associated with due diligence.

"This charge has been agreeable by the Tenancy Tribunal thus far and is seen [by them] as a fair and genuine cost to our business."

Barfoot & Thompson denied the fee rise is related to last year's ban on charging tenants a 'letting fee'.

"The previous change of occupancy fee did not meet these expenses and was raised to more accurately reflect the true cost associated," Ms Arnold said.

"We have offered our property owners the choice to pay an increase in management fees or pay the lump sum themselves and, as such, the ban on letting fees has been revenue neutral."

RENTER ADVOCATES SAY FEE IS UNREASONABLE

As letting fees were on the way out last year, Barfoot & Thompson told media those fees would likely be passed over to landlords.

Tenants Protection Association manager Penny Arthur says Barfoot & Thompson could be seeking to replace the lost revenue by charging tenants more in other areas, and that is unacceptable.

"While we can understand paying for an ad to be placed on TradeMe and checks to be done on prospective tenants, it should be a reasonable amount, and by agreement with the tenant," Ms Arthur said.

"The Residential Tenancies Act states that the landlord can 'recover from the tenant any expenses reasonably incurred by the landlord' - this means the fee should cover the reasonable costs of the landlord, and not be in addition to the costs.

"Many tenants are trapped in substandard living conditions as they cannot afford to move.

"Most tenants, regardless of their financial situation, object to being asked to pay an amount that does not reflect the actual cost of reletting the property.

"The industry should realise that tenants will continue to push back and will not accept this practice continuing."

Consumer NZ spokesperson Jessica Wilson said "a $400 fee simply to change the name on a tenancy agreement isn't reasonable and is hard to justify.

"We've been concerned about the fees property management companies are charging tenants to alter a tenancy agreement or end a fixed-term agreement early," Ms Wilson said.

"We've previously called for the Residential Tenancies Act to include a blacklist of unfair terms and fees."

PROPERTY INVESTOR GROUP: CHANGING TENANTS IS HARD WORK

New Zealand Property Investors Federation spokesperson Peter Lewis defended Barfoot & Thompson's fee, saying most tenants have "no idea" how much work goes into putting a new tenant into a property.

"It's not just a matter of running through some sort of online credit checking thing - normally they [new tenants] have to provide references - the property manager then has to contact those people," Mr Lewis said. "That is obviously a time-consuming business."

Mr Lewis said property managers should also conduct a property inspection at the point a new tenant moves in to establish a record in case of a bond dispute with the new tenant.

"Of course, a full property inspection takes at least an hour and then you've got to get there and back, which in the Auckland traffic can take some time," he said.

He said he believes the process of completing the form, carrying out a background check, any necessary reference checks and a property inspection could take anywhere up to six hours.

"It's not as simple and as facile as just signing someone a piece of paper and smiling and going off to lunch - there is a lot of work involved," Mr Lewis said.

Mr Lewis said his members had told him Barfoot & Thompson had indeed passed on letting fees to them, so he was skeptical of whether this fee increase was in fact in direct response to that.

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A composite file image of property firm Barfoot & Thompson.
A composite file image of property firm Barfoot & Thompson. Source: 1 NEWS