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The Healthy Homes Standards – What landlords need to know

March 22nd, 2019.


Do landlords need to do anything right now?

The Healthy Homes Standards were released in February 2019 and set minimum requirements in rental properties for insulation, heating, ventilation, moisture ingress, drainage and draught-stopping.

Final details for these regulations have not yet been released. We are still awaiting further clarification for each specific standard which we are told should be released in the next few months.

Once this detail has been released, landlords and property managers alike will only then really be able to start the process of ascertaining what (if any) modifications are required to their rental property in order to ensure that their rental properties meet the required compliance by the established deadlines. This will include obtaining from contractors a scope of works, timeframes required to physically complete the works, establishing the level of disruption to the tenant while these works are being undertaken and most importantly determining the cost that will be incurred not to mention having the time to obtain comparative quotes.

In the meantime though the only action required from landlords right now is to just keep abreast of whats going on and wait until those final details have been released before taking any action.

The PEDERSENS property management team are here to help you with all of this and take the stress away.



What impact will the Healthy Homes Standards have on landlords?

How will the Tenancy Tribunal determine whether a rental property is compliant or not under the new Healthy Homes Standards. Without some type of warrant of fitness that is governed by a regulated authorised body, which would then  evidence categorically that the rental property has been confirmed as being compliant and is fit for purpose. It becomes very subjective and could result in lengthy disputes while we wait for precedent to be set from the Tenancy Tribunal and cases it has ruled on.

Undoubtedly the cost of upgrading NZ’s rental stock to meet the new standards, along with the ongoing costs of compliance to ensure the property continues to meet these standards, will surely then see it being paid for through higher rents. It may not have an immediate effect, but along with other Government policies such as the ring fencing of losses and banning of tenant letting fees will negatively impact peoples willingness to be investors.

While this opinion may be unpopular with some, at the end of the day for a private landlord providing long term rental accommodation is a business and anyone in business is there to make a profit and not to provide a charity. If capital gains will not be as lucrative as it has been in previous years and the annual running costs significantly increase, then logic dictates that rental stock may start to diminish as landlords decide to leave the market and invest their money elsewhere. While these properties may be picked up by first home buyers or investors with a stronger appetite for the property market, it’s tenants who will in the long run end up paying for these changes by way of rent increases.


There will though also be an opportunity outside of the Healthy Homes Standard to look for ways to improve and upgrade your rental property in order to obtain a higher rental yield. Cost effective and relatively easy enhancements to the property, when done correctly, can have a significant impact on the desirability and rent that can be achieved if the property were taken to the open market.



 
Existing tenancies could trigger the earlier 2021 deadline

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It's So by offering your existing tenant a fixed term renewal/extension that commences on or after the 1st July 2021, you will be triggering the earlier deadline of ensuring your rental property is fully compliant for the new Healthy Homes Standards.

On that basis until all of the requirements around Healthy Homes have been made public, we would presently be recommending the following approach to fixed term renewals/extensions:

 
Keep fixed term expiry dates to before June 2021
For the moment we would recommend that any fixed terms being negotiated right now have expiry dates before the 30th June 2021.
 
Understand how much work and cost (if any) will be required to get compliant
Start to investigate and understand how much work and money is going to be required in order to get your rental compliant so when the next fixed term expiry comes due, you can make the best decision for you and your rental property when considering to extend a fixed term tenancy.
 
Consider your options with a Periodic Tenancy
New tenancies do not have to have a fixed term and existing fixed term agreements do not have to be renewed or have the tenancy ended (so long as the tenant has not given notice to vacate). New tenancies can be offered as periodic and expiring fixed terms can just roll onto periodic, whereby the tenant can at any time give 21 days’ notice to vacate and you as the owner can at any time give 90 days’ notice (so long as it is not retaliatory) to end the tenancy (or 42 days if the reason meets the set requirements). As always 60 days’ notice must be given for any rent increase.
 
Consider your options with a 2 to 3 year Fixed Term Tenancy
If a periodic tenancy is not for you, then consider a longer fixed term tenancy that gets you as close as possible to the July 2024 deadline to ensure you have the maximum time possible to get the property fully compliant.
 
Get in early and get compliant
There is also always the option of just getting on with it and getting it sorted well in advance of any deadlines so that you are not subjected to any restrictions stated above. Also by getting in early you will have more options around contractors and most likely more competitive pricing before the last minute rush starts and we see contractor availability massively decrease and the invert effect on pricing.


 

What are the new Healthy Homes Standards
 
  • Heating – Rental homes must have fixed heating devices in living rooms, which can warm rooms to at least 18°C. Some heating devices are inefficient, unaffordable or unhealthy, and they will not meet the heating standard requirements.
  • Insulation – Rental homes must have ceiling and underfloor insulation which either meets the 2008 Building Code, or (for existing ceiling insulation) is at least 120mm thick.
  • Ventilation – Rental homes must have the right size extractor fans in kitchens and bathrooms, and opening windows in the living room, dining room, kitchen and bedrooms.
  • Moisture and drainage – Rental homes must have efficient drainage and guttering, downpipes and drains. If a rental home has an enclosed subfloor, it must have a ground moisture barrier if it’s possible to install one.
  • Draught-stopping – Rental homes must have no unnecessary gaps or holes in walls, ceilings, windows, floors, and doors that cause noticeable draughts. All unused chimneys and fireplaces must be blocked.
Picture5-491



How long do landlords have to comply?
 
Picture4-168


Information in this article has been sourced from the following sites:
Tenancy Services Contact Centre – https://www.tenancy.govt.nz/
David Faulkner Real-Iq - https://realiq.nz/


 

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