Watch: Jacinda Ardern 'hopes' rents won't increase when letting fees abolished

Prime Minister Jacinda Ardern "hopes" that rents won't increase when letting fees are banned next month.

Her comments come as the Government passed legislation to see an end to the fee that will kick in on December 12.

When asked whether the abolition of the fee will see landlords increase rents to cover costs passed on to them, Ms Ardern said she "hopes" that won't be the case.

"Certainly, you would hope that would not be the case, letting fees is the cost of having a private entity come in and facilitate a new tenancy.

"Some landlords undertake that themselves and therefore see no need for that fee, so I would hope that we wouldn't see that increase given it's a service directly for the landlord," Ms Ardern said.

Earlier in the month, Housing Minister Phil Twyford said the timing of the ban intends "to give tenants a break before we enter the summer rental season when so many tenancies turn over".

He also called letting fees "unfair".

"They have no economic rationale and there is no relationship between the amount of the charge and cost of the services provided."

He said the ban was a "good first step" while the review of the Residential Tenancies Act takes place.

Andrew King of the New Zealand Property Investors Federation told TVNZ1’s Breakfast earlier this year that removing letting fees or charging owners would not ease the financial burden on tenants.

"It (the cost) will just be passed straight on (to tenants) unfortunately," said Mr King.

"It's a very complex issue, like most things are in housing, what seems like a good thing for tenants often isn’t."

According to Mr King, currently only 53 per cent of the rental properties are let out by a property manager, who are able to charge a fee, although not all do so.

The remaining 47 per cent of rental properties were let by owner-managers, who are not able to charge letting fees.

Mr King says any proposed changes will result in price increases for all tenants, including those not currently paying a letting fee.