Otago Property Investors Association Inc

Phone: 03 477 6220

Email: otago@nzpif.org.nz

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01-12-2018

Two important industry reviews

The NZPIF has spent a considerable amount of time and effort working on the Residential Tenancies Act Review and the Healthy Homes Standards.

Public submissions have closed, but thank you to all of you who took part in our membership survey and put in your own submissions on the two reviews.

The new Ministry of Housing and Urban Development received over 5,000 submissions, although many of them would have been through their online survey. Officials are now working diligently to analyse the feedback and prepare their report for Government with options they can consider.

We are not likely to hear what industry changes Government would like to make until around April next year, with draught legislation unlikely till the end of 2019. With such large and important changes, it is unlikely to be a speedy process getting the changes into law.

The RTA changes, especially around tenure, are the most concerning and would be extremely negative for tenants and rental home providers.

Some of the Healthy Homes Act standards we can agree with, and if implemented they would certainly shift the blame for any mould in a rental away from the property itself and onto the way the tenant is living in the property.

However we were against topping up of existing insulation in rentals and compulsory heat pumps in the majority of rentals.

We know you get diminishing returns from extra insulation. Despite 50% more insulation from topping up from previous standards to the latest, this only improves efficacy by around 6%.

Despite this, Government appears to want top-ups, as they commissioned research from Otago Medical School to see if top-ups provided health benefits. Unsurprisingly, they found they did. However there are deficiencies with the study.  The first is that they couldn't find any reductions in hospitalisations or reduced need for pharmaceuticals. The only benefit they found was in improved mortality rates. But even here, they couldn't find improvements in the general population, only in those over 65 years and then only those who also had a hospital admission for a circulatory illness. If you break down your data enough, you are bound to find a result that suits your purposes.

Another problem was picked up by the NZIER, finding that the way they calculated mortality benefit was not best practice and overestimated the benefit by three times what it should be.

It will be extremely disappointing if Government use this study to claim that rental property insulation should be topped up. It would be a complete waste of money for no benefit to tenants health.

Likewise with compulsory heat pumps. We accept that rental properties should have heaters supplied, but do not agree with banning electric heaters over 2400w because of their higher running costs. The high cost to supply and maintain heat pumps will push up rental prices and offset any benefit of lower running costs. Some tenants will never use their heat pump, but will pay a higher rental price for the privilege of having it sit idle on the wall.

During the consultation process on the new standards, we also discovered another blow. At the time of writing this, Labour still stated on their website that they would "assist homeowners and landlords to make their houses warm and healthy to live in with grants of up to $2,000 towards upgrading insulation and heating".

Unfortunately they have axed this election promise for landlords, meaning the full cost of the new standards will have to be met putting more pressure on higher rental prices.

The NZPIF is not against increasing the standard of rental properties in NZ, but these standards must be of real benefit and cost effective, because ultimately it will be tenants who pay the cost of them.

We all hope that Government will be principled when they look to improve rental standards and reject those changes that will not assist tenants to have better living conditions or manage how they live in their own homes.

 

 

 

Tags: federation reports

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