Landlords react to compulsory insulation

Wednesday 17 October 2007

Responding to the government’s plans to make landlords insulate their properties, the NZ Property Investors Federation (NZPIF) president Martin Evans says the federation is opposed to any compulsory measures.

A better approach would be to let the market decide, as an appropriately insulated rental property will attract a better standard of tenant and encourage them to stay longer, says Evans.

Earlier this year the NZPIF negotiated a 55% discount with ECCA on insulation for its members to encourage them to insulate their rental properties. This led to 1300 applications to take advantage of the scheme being received over a short period of time.

The discount has now been extended to all landlords. However Evans says the information about this second stage was only given to NZPIF at the beginning of last month, “and, as far as we know, has not been widely publicised to landlords in general. For the government to say that compulsion will be considered if the scheme is not taken up in higher numbers is premature”.

Any regulation will be fraught with practical difficulties, says Evans, such as policing for compliance. At the recent series of HERS stakeholder meetings, it was indicated that the cost per inspection might be $350, with no details of how many inspections would be required.

“Additionally, the cost of insulation and ongoing inspection costs will add to the cost of providing rental property and lead to further rental price rises.

“If the government wants to improve the uptake rate for insulating rental properties they should consider offering an alternative discount for just the materials and allow landlords to install it themselves. Currently the discount only applies if the insulation is installed professionally, which adds to the cost even if it is subsidised,” says Evans.
 
The present discount scheme is only available for rental properties with low income tenants; limiting the scope of the scheme. “If it is good enough for low income tenants, it should be good enough for all tenants” says Evans.

“Given that around 70% of all homes are owner occupied, the environmental savings would be greater if applied to all homes, not just single out rental properties.”

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