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Legislation updates

New insulation and smoke alarm requirements to implement changes to the Residential Tenancies Act 1986 have now been approved by cabinet and these changes to the tenancy law aim to make homes warmer, drier and safer for hundreds of New Zealanders without imposing excessive bureaucracy or cost.

We at Quinovic Mt Eden are always happy to assist our landlords with education and support around how these changes will affect your investment property as well as organising any work that may be required to ensure your investment property is compliant.

 

The changes create new requirements for insulation and smoke alarms in all residential tenancies and will require that from 1st July 2016:

  • All rental properties have smoke alarms
  • All new tenancy agreements include a statement of the extent and safety of insulation in the property
  • Any replacement or installation of insulation in a rental property meets the required standard

And from 1st July 2019

  • All rental properties have underfloor and ceiling insulation meeting the required standard where it can practically be installed

Q&A: The Residential Tenancies Act 1986 Insulation and Smoke Alarm Requirements

How will I know if I need to upgrade my insulation?

Rental properties that already have insulation installed must be upgraded if the ceiling and underfloor insulation do not meet the R-value levels set out in the table below at the time the insulation was installed. These R-values are shown in Table 1.

Table 1 – Level of insulation below which rental properties must be upgraded (product R-values)

Timber-framed minimum                                                                 Masonry minimum

Ceiling                    R 1.9                                                                     Ceiling                      R 1.5

Underfloor            R 0.9                                                                  Underfloor                 R 0.9

These levels approximate the requirements for new properties built between 1978 and 2001 (NZS4218O:1977).

If the insulation has become very compressed, is damp, damaged or is incomplete it must be upgraded to meet the requirements as shown in Table 2.

What level do I need to upgrade my property to?

All rental properties that currently have no insulation in ceilings and underfloor must have new insulation installed to levels that have been set to approximate the current Building Code requirements for new homes.

The map below illustrates the Building Code climate zones that the table refers to, with Zone 1 being the warmest areas and Zone 3 being the coldest.

Table 2 – Minimum new and topped up insulation requirements for rented homes (product R-values)

Zone 1 & 2                                                                                        Zone 3

Ceiling                 R 2.9                                                                      Ceiling                 R 3.3

Underfloor         R 1.3                                                                     Underfloor            R 1.3

When will landlords be required to insulate rental properties?

There will be a two-stage approach for landlords to implement the insulation requirements: Social housing providers (housing where tenants pay an income-related rent for a Housing New Zealand (HNZC) or community housing provider homes) by 1st July 2016;

And

The remainder of the residential rental market (including boarding houses) by 1st July 2019 – The vast majority of Ray White managed properties would fall under this requirement, being on or before 1st July 2019.

Local authority housing and housing owned by Government other than HNZC (for example, properties owned by school Boards of Trustees), will be required to comply with insulation requirements by 1st July 2019.

Can landlords install insulation themselves?

Landlords are able to install their insulation themselves. However, if a landlord installs the insulation incorrectly they could face insurance and liability consequences for faulty or negligent installation. Please note the standard access requirements apply as set out in the Residential Tenancies Act 1986.

Are any properties excluded from having to meet the new insulation requirements?

The following three categories of residential rental properties are excluded from the insulation requirements in the regulations:

  • Where it is not practical to retrofit insulation because of the physical design or construction of the property, but only until such time as access to these spaces becomes possible; Ceiling insulation will have to cover all applicable habitable spaces i.e. spaces used for daily activities. A suspended floor must have underfloor insulation in reasonable condition covering all applicable habitable spaces. However, it may not always be practical to retrofit insulation in all habitable places.
  • Where, within 12 months of the commencement of a tenancy, the landlord intends to demolish or substantially rebuild all or part of the property, and can provide evidence of having applied for the necessary resource consent and/or building consent for the development or building work.
    • Where a property is purchased and immediately rented back to the former owner-occupier in which case a 12 month exemption will apply from the date of purchase.

What are the new smoke alarm requirements?

The new smoke alarm standards will require a minimum of one working smoke alarm within three meters of each bedroom door. In a self-contained sleep-out, caravan or similar, a minimum of one working smoke alarm will be required. In a multi-level unit, there must be a working smoke alarm on each level.

The landlord must ensure that the alarm is operational at the beginning of each new tenancy. The tenant will be responsible for changing batteries during their tenancy.

When do smoke alarms need to be installed?

Smoke alarms must be installed in all Residential rental properties by 1st July 2016.

What sort of smoke alarms need to be installed?

Where there are currently no smoke alarms, long-life photoelectric alarms will need to be installed. Long-life alarms cannot have their batteries easily removed, and are more cost-effective over time because batteries do not need to be replaced every six to 12 months. If a property has existing smoke alarms that are not long-life photoelectric, landlords will not need to replace them immediately. But when they do need replacing they must be replaced with long-life photoelectric alarms.

Is the landlord or the tenant responsible for changing the batteries?

It will be the duty of the tenants to replace smoke alarm batteries. While the responsibility for battery replacement in standard 9-volt battery alarms would remain with the tenant, the need to replace batteries would reduce over time as landlords replace existing alarm types with long-life ones.


Residential Tenancies (Healthy Homes Standards) Regulations 2019

Download the complete bill here: DOWNLOAD

Compliance with the standards

Compliance timeframes

Compliance with the standards are:

  • 1 July 2021 – From this date, private landlords must ensure that their rental properties comply with healthy homes standards within 90 days of any new tenancy.
  • 1 July 2021 – All boarding houses must comply with the healthy homes standards.
  • 1 July 2023 – All Housing New Zealand houses and registered Community Housing Providers houses must comply with the healthy homes standards.
  • 1 July 2024 - All rental homes must comply with the healthy homes standards.

Heating standard

The standard

There must be fixed heating devices, capable of achieving a minimum temperature of at least 18°C in the living room only. Some heating devices are inefficient, unaffordable or unhealthy and will not meet the requirements under the heating standard.

World Health Organisation standard

Rental homes are often well below the World Health Organisation’s recommended minimum indoor temperature of 18°C. A large proportion of rental homes have no, inadequate or inefficient heating available for tenants to use to reach an appropriate indoor temperature. 22% of rental homes have no fixed heating in the home and many more homes only have unaffordable or unhealthy heating.

Fixed heating devices

The heating standard will require all rental homes to have a fixed heating device capable of reaching 18°C during the coldest days of winter in the main living room. The main living room is the largest living room in the home. The heating standard does not require bedrooms to have heating devices as most bedrooms can be heated by portable heaters which are relatively inexpensive to buy. Heaters that have a capacity to reach 18°C, even during very cold weather, are capable of reaching higher temperatures most days of the year.

Online tool

An online tool will be available to calculate the required capacity of a heater in kilowatts. This tool will provide a kilowatt figure using the size of the room and information about insulation and windows. It is expected that the heating tool will be available by 1 July 2019. Landlords and tenants will not have to measure temperatures inside the home.

Heating Standard - Types of heating devices

In most cases, the fixed heating device required will be a larger device such as a heat-pump or wood burner. In some cases, such as small apartments, a smaller fixed electric heater will be sufficient. The minimum size of the small fixed heater that will be acceptable is 1.5 kilowatts.

Some heating devices are inefficient, unaffordable or unhealthy to run, such as unflued gas heaters, open fires and electric heaters (except heat pumps) with a heating capacity greater than 2.4 kilowatts. These particular heating devices will not be accepted in the heating standard, meaning that while they can still be used, they won’t meet the standard and the landlord will in most cases need to provide an alternative, acceptable fixed heating device.

Insulation standard

The standard

The minimum level of ceiling and underfloor insulation must either meet the 2008 Building Code, or (for existing ceiling insulation) have a minimum thickness of 120mm.

Insulation

Many rental homes do not have adequate insulation to retain heat and are more likely to be cold and damp. Insulation minimises heat loss from homes making them easier and cheaper to keep warm and dry, and healthier to live in.

Insulation requirements

New ceiling and underfloor insulation must meet the 2008 Building Code insulation standard. Existing ceiling insulation must be at least 120mm thick and in reasonable condition. This new standard aligns with research from the University of Otago, which shows that topping up insulation less than 120mm results in noticeable health benefits.

Insulation exemption

The standard does not require further work from landlords who have installed insulation to meet existing 2016 insulation requirements which remain in force including the 1 July 2019 deadline. The healthy homes insulation standard affects a new group of rental homes that were not required to retrofit insulation under the 2016 requirements. These homes will have approximately 70-120mm of ceiling insulation currently.

Compliance

Landlords still need to comply with the 2016 insulation requirements by 1 July 2019.

Ventilation standard

The standard

Ventilation must include openable windows or doors in the living room, dining room, kitchen and bedrooms. Also an appropriately sized extractor fan(s) in rooms with a bath or shower or indoor cooktop.

Ventilation to prevent mould

Mould is strongly linked to poor health outcomes, such as respiratory illnesses and worsening asthma. Mould also damages walls, ceilings, and floors, and can damage a tenant’s possessions.

The presence of dampness and mould is a particular problem in areas where there tends to be high moisture activities, such as showering or cooking. A study by BRANZ shows New Zealand rental homes have visible mould at greater levels than owner occupied homes, particularly in bathrooms and kitchens.

Industry recommendations

BRANZ recommends opening windows for 10 to 15 minutes to provide sufficient ventilation after showering or cooking, but we know this is not always possible or effective to do, for reasons such as security concerns or weather.

Types of ventilation

Mechanical ventilation, such as extractor fans or rangehoods, is easy to use and noticeably improves the ventilation in a home, reducing the incidence of mould forming. The proposed standard would require all bathrooms and kitchens to have mechanical extract ventilation, in addition to opening windows in habitable rooms.

Moisture ingress and drainage standard

The standard

Landlords must ensure efficient drainage and guttering, downpipes and drains. If a rental property has an enclosed subfloor, it must have a ground moisture barrier if it’s possible to install one.

Moisture

Moisture can also enter a home from outside, such as by rising damp, or water pooling under and around a house, or through leaks in drains. Many rental homes are not sufficiently protected from rising moisture in the subfloor or leaking drains.

Drainage and guttering

The standard ensures adequate protection for rental homes by requiring efficient drainage and guttering as required by the Housing Improvement Regulations and ground moisture barriers in all rental homes with an enclosed subfloor space.

Ground moisture barriers

Ground moisture barriers are an effective and low cost retrofit option for addressing what can be the largest source of moisture entering the home from outside. Ground moisture barriers would be required regardless of existing subfloor vents as these homes are still likely to experience a benefit. This approach creates a simple and easily enforceable standard.

Draught stopping standard

The standard

Landlords must stop any unreasonable gaps or holes in walls, ceilings, windows, floors, and doors that cause noticeable draughts. All unused open fireplaces and chimneys must be blocked.

Draughts

Draughts make it hard and expensive for tenants to heat their home, and can limit the benefits of improved insulation and heating. Fixing draughts can be a relatively simple and low cost measure to keeping rental homes warm and dry.

Guidance for landlords

Clear guidance will be available for the draught stopping standard on landlords’ responsibility to stop any unreasonable gaps or holes in walls, ceilings, windows, floors and doors that cause noticeable draughts, and to block unused open fireplaces and chimneys. The guidance will clearly detail reasonable thresholds for draughts and how to stop common draughts, so landlords and tenants can be confident of the obligations and measures to be taken.


CGT veto hailed by investors

Months of speculation on the prospect of a capital gains tax on investment property ended with the property investment sector last week hailing the Government’s decision to put the idea of a CGT to bed, and Prime Minister Jacinda Ardern vowing it would stay off the agenda during her time at the top. Andrew King, executive officer of the NZ Property Investors Federation, said it was the best thing the Government could have done, with $150 billion of property or a third of homes at stake. Around 270,000 landlords owning 464,000 residences for more than 1 million tenants would have been “hit hard” by a CGT like that proposed by the Tax Working Group (TWG) recommendations to tax residential investment property gains.

"CGT Tax is Political Suicide"

Others who had supported the tax on investment properties included Westpac chief economist Dominick Stephens who said it would improve housing affordability and lead to a higher rate of home ownership. Deputy Prime Minister and NZ First leader Winston Peters, who has been opposed to a CGT, said the coalition government would work on a number of changes recommended by the TWG, including discouraging landbanking and making multinationals operating in NZ pay their fair share.