By Frank Newman on 14th January 2017
I am a keen believer in having to-do lists; to-do this year, to-do this week, and to-do today. For landlords, the to-do this year list is likely to include things like reducing debt, further investment, and planning property improvements. Many will have insulation high on the 2017 to-do list, partly because tenants are now demanding warmer homes, but also because as from 1 July last year and amendment to the Residential Tenancies Amendment Act made minimum standards of insulation mandatory.
Landlords have until 1 July 2019 to get the work done. It is estimated that some 300,000 homes will need to be ungraded nation-wide, and human nature being what it is, there is likely to be a mad rush as the must-do-by date draws closer.
The new legislation requires all residential rental homes to have a minimum prescribed level of insulation, set at the standards that prevailed in 1978. If a rental was built after that date, and the insulation is still in good condition, then no upgrade is required.
There are some exemptions, and the legislation does take into account situations where it’s not practical to retrofit insulation because of the physical design or construction of the property until access to these spaces is gained.
As from 1 July last year landlords were also required to provide a signed “Insulation Statement” with a new tenancy agreement, specifying the location, type and condition of insulation in the rental home. Failure to do so, or making a false statement, can result in a $500 fine.
The Insulation Statement may be completed by the landlord or their property manager, or someone else, and a number of insulation companies are offering this service for a fee. I know of one that charges $45 and another $70, which, in both cases, is refunded if insulation is purchased.
For those who do want to do a DIY Insulation Statement, the tenancy.govt.nz website has a page specifically about “writing-an-insulation-statement” (enter “insulation” in their search tool). This takes the reader through three steps and includes examples of the text to include. It’s well done and easy to follow – the difficult part is actually getting under the house or into the ceiling cavity to do the inspection, and knowing whether existing insulation is up to standard.
The advantage of having an expert do it is they not only write the report but they will:
• Assess the condition of any existing insulation.
• Coordinate with your tenant.
• Provide a quote to bring the insulation up to standard, if necessary.
• Offer advice on subsidies and payment options through local councils (if this is available).
• Check that smoke alarms comply (which are now also required under the new Amendment Act), and
• Advise on heating and ventilation options, if this is of interest.
To encourage insulation, the Government is offering 20,000 grants to landlords under the Warm Up New Zealand: Healthy Homes programme. To qualify for a subsidy of up to 50%, the rental property must have been built before the year 2000, and the named tenant must have a Community Services Card.
In some cases local authorities offer property owners an option of paying for insulation and heating costs as part of their rates bill. Councils offering this option (at a set interest rate) include, Auckland Council, Bay of Plenty Regional Council, Dunedin City Council, Greater Wellington Regional Council, Hawke’s Bay Regional Council, Invercargill City Council. Marlborough District Council, New Plymouth District Council, South Taranaki District Council, and South Waikato District Council.
In my view landlords would be wise to add “Insulation Statement” to their to-do this week list, and obtain an estimate of the cost to have the insulation in each of their rental properties brought up to the required standard. Where they qualify for a subsidy, they should take advantage of it while they can, and while it’s still available. The other properties that do not qualify should be placed on a work programme and done as finances allow, or when a subsidy becomes available for that property.