A new legislation came into effect on Tuesday to remove letting fees for tenants, said New Zealand Housing and Urban Development Minister Phil Twyford.

The government is making life better for tenants who will not have to worry about letting fees during the busy summer rental season, Twyford said in a statement.

"This will make a real difference to struggling families. There are significant costs associated with moving to a new rental property, which many families are now forced to do every year," the minister said.

"Letting fees are unfair on tenants. They have no economic rationale and there is no relationship between the amount of the charge and cost of the services provided," Twyford added.

Property managers have indicated that they will be charging landlords for their services, which is entirely appropriate as it is a service provided to landlords, not tenants, he said.

"Landlords don't have to pass on these costs and many of them won't. Reserve Bank research shows that in New Zealand rents are driven primarily by supply and demand," Twyford said.

Banning the charging of letting fees to tenants is a good first step in improving the life of tenants while the government continues the broader review of the Residential Tenancies Act, which aimed at giving tenants security of tenure and allowing them to make their house a home, while protecting the rights and interests of landlords, the minister said.

"Our tenancy laws are antiquated and don't reflect the fact that renting is now a long term reality for many of our families," he said, adding ultimately the best way to put tenants in a better situation is to increase the supply of housing, and end the shortage that is driving rents up.