Cost of standards will hit tenants

Monday 25 February 2019

Parts of the Government’s new Healthy Homes minimum standards are not cost-effective and that will impact on tenants, according to investor advocates.

By Miriam Bell

The Government yesterday released its long awaited Healthy Homes minimum standards, which are intended to ensure rental properties are warmer and drier for tenants, and the response has been mixed.

While the Green Building Council says the new requirements don’t go far enough, the NZ Property Investors Federation is supportive of the need for quality standards in rental properties.

But NZPIF executive officer Andrew King says that tenants ultimately pay for the required improvements so they need to be cost effective – and two parts of the new standards don’t meet this requirement.

Those areas are the requirements around insulation and fixed heating, he says.

“We support compulsory insulation in rentals but topping up existing insulation provides very little improvement for tenants while costing almost the same as installing completely new insulation.”

“We also support fixed heating in rentals and heat pumps are a great source of heating for some tenants.

“However, they are expensive to buy, install, maintain and replace so will increase rental prices by around $15 per week.”

This means tenants who do not want and will not use a heat pump will still be paying for it through higher rent, King says.

“Allowing cheaper but less energy efficient heaters would not require rental price increases and would give tenants greater choice in how they live in their home.”

Some other investor advocates were more critical of the new standards, which include requirements for insulation above the current standard, living room heaters, ground moisture barriers and adequate drainage.

Stop the War on Tenancies spokesperson Mike Butler says the new compliance requirements whack rental property owners with thousands of dollars in additional costs.

In his view, it is the additional insulation requirement that is the biggie.

He says official advice to the Minister was that the optimum cost-benefit is to the 1978 standard of R 1.9 in ceilings, as currently required, and anything over that has diminishing benefit.

“Yet the Minister has gone ahead and whacked rental property owners with the most extreme 2008 option of R 2.9 in ceilings, which means that all insulation will have to be redone.”

Butler says there will be lots of rental property owners who thought they were doing the right thing by installing insulation as required but who now find out that they have to do it all over again.

There is not a crisis in the condition of rental property. There is a crisis in the availability of rental property and the extra compliance requirements will make this worse.

“Owners have three options: Absorb the extra costs, raise rents, or sell. Ask any accountant. Owners are selling. So then where will renters live?”

Read more:

Revealed: Healthy Homes minimum standards 

Comments from our readers

On 25 February 2019 at 11:05 am Sooky1 said:
Of course the tenants will bare to cost of any improvements in the finish, first of all the costs will be borne by the Landlord, he will reclaim any GST then the costs of any improvements via the profit & Loss accounts, he will in turn put the rents up to recover those costs because any tenants going forward will derive all of the benefits of those improvements, does "Motor Mouth" Twyford expect to implement Gold Plated tenancies for all renters!! for peanuts, the only Landlord in the land that will provide all of these improvements for free to the Tenants is HNZCI, and they have a bottomless money pit courtesy of the long suffering Tax payer.

Sign In / Register to add your comment

Property News

Upping the ante on price growth

ANZ economists have become the latest commentators to revise up their house price inflation predictions and are now picking 8% growth by mid-2020.

House Prices

Values pick up the pace

There’s a more upbeat feel to the property market and it’s obvious in this month’s QV data which has values firmly on the rise.

Commercial

Proptech the future for commercial investment

Commercial property start-up Jasper is the new kid on the block but some have asked how it differs from traditional property syndicates. Jasper’s founders explain the points of difference for us…

Mortgages

Putting the RBNZ's new capital rules into perspective

There's been a lot written about the Reserve Bank's new capital rules for banks and some of it seems to miss the mark. Here's Tarawera Publishing managing director, Philip Macalister's, take after hearing from the governor yesterday.

Site by PHP Developer