Law changes for rental properties

From 1 July 2019, several significant changes came into effect which impact landlords, residential tenants and property managers. 

While the law changes have been a long time coming, the media reports that over 40 complaints have been made to the Tenancy Tribunal in the first 4 days of the new rules being in place and almost 500 calls have been made to MBIE on the issue.  Given those numbers, it appears that landlords and property managers have been slow to act.

With that in mind and against the background of falling home ownership rates, let’s dive into the legislative changes to see how they affect you.

Insulation compulsory in rental homes

From 1 July 2019, all rental properties in New Zealand must meet ceiling and underfloor insulation standards.  Essentially, this means that all rental properties must have ceiling and underfloor insulation installed, where it is reasonably practicable to do so.  Insulation in the walls is not required.

The Residential Tenancies (Smoke Alarms and Insulation) Regulations 2016 sets out the minimum standards.  The standards impose minimum R-values for insulation; the higher the R-value, the better the insulation.

The minimum R-value that applies to your residential tenancy depends on what part of the country the property is located.  Unsurprisingly, the South Island and Central Plateau require the best insulation, with lower standards applying for the rest of the North Island.

However, there are exceptions to the requirements to install insulation.  These are:

• Where due to design or construction constraints of the property, it is not reasonably practicable to install insulation.  For example:
  
  
• Where it is not physically possible to insulate (such as houses built on concrete slabs or apartments that have habitable spaces above and/or below them; or
  
  
• Where an experienced professional insulation installer can’t access the location to install insulation without carrying out substantial building work or causing substantial damage to the property, or without creating health and safety risks over and above that which would normally be present when installing insulation;
  
  
• Where the Landlord intends to demolish or substantially rebuild all or part of the property within 12 months of the start of the tenancy; and
  
  
• Where a property is purchased from and then immediately rented back to a former owner-occupier.  There, a 12 month exception will apply from the date of purchase.

Landlords need to be careful when relying on exceptions, as penalties of up to $4,000.00 are payable if landlords violate the rules or improperly rely on an exception.  Where access to the ceiling or underfloor can be achieved by carrying out minor work, that work must be carried out. 

Further, even if a landlord can legitimately rely on an exception, any future work done to the property can affect the landlord’s ongoing ability to rely on the exception.  For example, if work is carried out in future that meant insulation could be fitted (such as installing a new roof or replacement of lining or exterior cladding), the landlord must install insulation as soon as practicable.  This likely means at the same time as the work that enabled insulation to be installed.

Healthy homes standards now in force

In February 2019, the Government announced the healthy homes standards, which are aimed at ensuring all Kiwis have warm and dry rental homes.

On 1 July 2019, the healthy homes standards became law.  The standards introduce specific and minimum standards for heating, insulation, ventilation, moisture and drainage, and draught stopping.

Fortunately, landlords have some time to comply with the new rules.  All private rentals must comply within 90 days of any new or renewed tenancy after 1 July 2021, and all private rentals must comply by 1 July 2024 (capturing long-term rentals).  Boarding houses must comply by 1 July 2021, while Housing New Zealand and registered Community Housing Providers have until 1 July 2023 to comply.

What do landlords and property managers need to do now?

With s much change in the industry and tenants actively enforcing their rights, landlords should be looking to do the following now:

• Check that your insulation meets the minimum standards;
   
• Check that your residential tenancy agreement includes a complete insulation statement (which have been compulsory since 1 July 2016);
   
• Check that your residential tenancy agreement includes a signed statement that the landlord will comply with the healthy homes standards;
  
  
• Keep full and accurate records of any exceptions relied upon in relation to insulation requirements, and compliance with the healthy home standards; and
  
  
• Monitor future works at the property to ensure exceptions relied upon are not invalidated and insulation is installed as soon as practicable.

If you have any questions about your rights and obligations in relation to residential tenancies, contact Sarah Churstain or Jono Cole.