Security deposits should be held by the municipality. Should the landlord wish to claim it, they can prove their case in court.
Fuck the status quo forever. Unforgivable.
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Yeah, key money is explicitly illegal in NZ - the only money you are allowed to collect is a bond of no more than 4 weeks rent (which has to be lodged) and the first weeks rent in advance.
The most common form of shady dealing is that the law requires that tenants leave the house in a "reasonably clean and tidy state" - landlords and the tenancy tribunal don't typically agree on what "clean and tidy" means, so "oh, when we did the hand over inspection we found some places you didn't clean absolutely spotless so we had to hire a cleaner and want to take that out of your bond" - if you question or challenge it they typically withdraw the claim because you were such a good tenant and just this once and not at all cos they are bluffing and know the tribunal would immediately tell them to get bent, but that requires you to a) know your rights and b) be willing to call them on it, and people are typically neither of those things.
Landlords will typically also add something to the rental agreement or whatever requiring you to have the carpets professionally cleaned before you leave - the tribunal has repeatedly held that this is unreasonable to require and as long as the carpets are clean then the landlord doesn't get to dictate how they were cleaned. Doesn't stop letting agents asking to see a receipt.