The government has introduced a bill that will ban letting fees, with Housing Minister Phil Twyford saying they're an "unjustifiable tax on renters".

"It's a bizarre anomaly that the current law allows letting agencies to provide services to landlords but charge tenants for it, the minister told reporters on Thursday.

"They can just charge the landlords."

He said - with home ownership at a 60-year-low and close to half of New Zealanders now renting - the bill would save tenants about $47 million.

The hope was to have the fees gone by the end of the year.

"When moving into a new rental property, tenants can face up to four weeks' bond, two weeks' rent in advance and one weeks' rent as a letting free - in addition to moving costs," Mr Twyford said.

"This could make a real difference to struggling families."

The Property Investors Federation - which represents landlords - says depending on market conditions, either the landlord or tenant could currently benefit from letting fees.

"By banning letting fees you are banning choice for tenants and landlords."

Real Estate agents have also argued tenants are receiving a service and aren't a third party.

But Mr Twyford said the new policy would let the market decide.

While landlords would be free to pass the cost on through higher rent, based on market conditions, experiences in countries such as Scotland showed banning letting fees didn't push up rents, he said.

A letting fee is intended to cover the landlord's cost of putting a tenant in place and is normally one week in rent plus GST.

The fee is charged by agents and is not refundable.