The Healthy Homes Standards came into effect on July 1 and are being rolled out over the next few years. While there is no question that tenants deserve a warm, dry place to call home, there is growing concern that compliance and other legislation changes may be detrimental to the NZ rental market.
The Healthy Homes Standards were created to improve the quality of rental homes in New Zealand and reduce the number of hospitalisations due to poor housing. The regulations include minimum standards for heating, insulation, ventilation, moisture and drainage. Click here to read the Standards in full.
The decision has been widely welcomed because the quality of rental property in New Zealand is known to be well below standard. In fact, hundreds of thousands of tenants throughout New Zealand are living in cold, damp rental accommodation.
While many landlords already do the right thing by providing adequate housing for tenants, the Standards are there to ensure every rental property complies with minimum requirements. Landlords had to meet insulation regulations by July 1 2019 and all private residential properties must satisfy all requirements by 1 July 2021.
While there is no question that all tenants and their families deserve to live in a safe, healthy home environment, there have been reports of concern that the Standards may adversely impact both landlords and tenants. Below are some of the concerns that have been raised.
The cost of renovations required to comply may be passed on to tenants
There have been concerns raised that the Standards could lead to rent increases if landlords are either unable to afford the costs of any renovations required to comply or decide to pass them on to tenants. Because rental affordability is another concern in New Zealand, Labour MP, Phil Twyford, says rental increases would be a step in the wrong direction. A change that could be on the horizon to alleviate this concern is a government grant for insulation.
The Standards may skew supply and demand
Some landlords may be unable to meet new regulations on time and this has already been seen with the insulation deadline that passed on July 1 this year. For example, in Dunedin, many rental properties are currently vacant because they do not comply with previous insulation standards. In the three months to July 1, there were reports of landlords relying on insulation contractors from out of town with some reportedly resorting to doing it themselves, either to save money or because they were unable to find a contractor in time. With the already existing shortage of rental housing in New Zealand, there is concern that the Standards may add to that pressure.
The removal of negative gearing
Around 400,000 NZ landlords invest thousands of dollars into their rental properties. Taking away negative gearing has removed their ability to offset rental losses against their personal income, which in many cases is significant and could be used to finance improvements. Approximately 90% of landlords in New Zealand own just one or two rental properties. Negative gearing was a vital tax break for the financial viability of their investment.
Many believe that the best thing the government could have done was put the negative gearing change on hold until all properties complied with the Healthy Homes Standards.
Ignorance is not bliss – failing to comply is not an option
Despite the concerns, the fact is, the Healthy Homes Standards are now in force and failure to comply could result in a landlord facing $4,000 exemplary damages through the Tenancy Tribunal. They could also be issued a work order to ensure that the work is done and if they ignore that, they could face an extra $3,000 in exemplary damages. If landlords opt to bury their head in the sand, they are at risk of copping these hefty penalties.
How we can help
Recently launched, the Healthy Homes Evaluation Report offers you a simple, fully customisable way to process and manage the Healthy Homes Standards requirements through Maintenance Manager to help guide and support landlords through the process, including finding and booking contractors to complete any work that needs to be done.
For more information, contact the team at PropertySafe on 029 239 1134 or 09 887 3299 or head to link to website.