Crocker’s property managers have been working hard with their clients over the last 12 months to ensure that their properties are compliant for the introduction of the Healthy Homes Guarantee Bill as we are fully aware of the impact it will have on the market and want to make sure our clients are prepared.
The 2018 – 2019 year looks to be a challenging one for residential property investors throughout New Zealand as it will bring some of the largest legislative changes for tenancy law since the introduction of the Residential Tenancy Act back in 1986. The Governments Healthy Homes Guarantee Bill passed into law in December 2017 with most of the changes taking force from July 2019, and will set minimum standards for all residential investment properties.
- Standards about the indoor temperatures that must be capable of being achieved in the premises. We have been informed that is likely to be 18 degree Celsius.
- Heating. Likely that a source of heating must be provided for living areas and have to be energy efficient.
- Insulation. These standards have already been set.
- Moisture ingress.
- Draught stopping.
If landlords fail to meet obligations in respect of Healthy Homes standards, then they may potentially face exemplary damages of up to $4,000 plus face a work order instructing them to get the property to the standards before they can rent it out.
We will of course keep you updated as the standards are released.
There are a few exceptions to properties that require insulation
- A professional insulation installer cannot access the area without carrying-out substantial building work or cause damage to the property.
- A professional insulation installer cannot access carry out the installation without creating an unacceptable risk to health and safety.
- The tenancy is prior to 1 July 2019 and the landlord intends to demolish or rebuild the premises before 1 July 2020.
- The tenant is a former owner of the property and became the tenant immediately upon the sale of the property to the current owner. In this case, the exception expires 12 months after the commencement date of the tenancy.
However, the obligation to install insulation is ongoing, so if the circumstances preventing installation of insulation cease (for example, if relevant substantial building work is being carried out for another reason), then insulation must be installed as soon as reasonably practicable.
Are you ready
Recently we carried out our quarterly CPI with questions about the Healthy Homes Act and found that 65% of respondents already had all their rental properties insulated. 12% of investors have not currently insulated their property. Given the number of investor properties in Auckland 12% is a very large number of investors yet to bring their property up to standard in the next 10 months or face potential $4,000 fines.
Price of Insulation
Respondents were also asked if they had noticed any price fluctuations after various news outlets reported that insulation providers had increased their prices up by the same amount of the government subsidy – essentially meaning that the providers are pocketing the subsidy. Overall, among property investors there is a level of unawareness of the price of insulation. However, 18% of investors have noticed a price increase, suggesting that there may be evidence of price gouging in the market for insulation which we predict will only get worse the closer to the July 2019 deadline.
The Tenancy Complaints and Investigations Team (TCIT) was set up in 2016 as part of law changes which introduced mandatory insulation rules for residential rental properties. It gave the Ministry of Business, Innovation and Employment (MBIE) power to directly prosecute landlords who breached basic housing standards - rather than depend on tenants to take them to the Tenancy Tribunal.
Since the TCIT was formed it has received 910 complaints of which 439 were confirmed as breaches. The largest fine issued by the TCIT was $38,000 for continuous breaches of the Residential Tenancy Act.
As well as investigating alleged breaches, landlords and property management companies are proactively visited and their business processes and systems are audited for compliance with the Act. Once the Health Home Guarantee Bill comes into force in July 2019 we expect to see the number of audits increase to ensure Landlords and Property Managers are complying with the Bill.
Learn more at our Property Investment Series event.
For more information:
021 220 6233