Tenants will pick up cost of Government’s healthy homes standard, investors warn

Changes to rental rules will drive up rents and push some landlords out of the market, a property commentator has warned.

This morning, the government announced new Healthy Home standards, to reduce the numbers of people falling sick due to cold, damp and mouldy rental properties.

But it comes at the same as other costs are imposed, such as tax changes.

READ MORE: Standards outline minimum requirements for heating and insulation in rental properties.

“This is one of the most important public health reforms that we can make as a country,” Housing Minister Phil Twyford said.

“Approximately 1,600 mostly older New Zealanders die premature deaths every winter,” he said.

“Some 6,000 children get bundled off to hospital every year with infectious and respiratory diseases.”

Many of those children would have life-long health problems as a result, he said.

“For every dollar we spend on making homes safer, we're saving at least six dollars of further health, particularly health and education costs down the road,” said Greens co-leader, Marama Davidson.

The standards kick in this July. Private landlords have two years to comply while Housing New Zealand, which has 68,000 homes, has four years.

Landlords were generally supportive of higher standards but warned rents would be driven up.

Insulation standards were hiked three years ago, and the Property Investors’ Federation said the latest steps only improved thermal efficiency by ten percent.

“It is disappointing,” said the Federation’s executive officer Andrew King.

“It's quite expensive to top up, it's almost the same cost as new insulation,” he said because of the labour involved.

“That will increase rents and really provide no benefit to tenants,” he said.

Government papers cite costs of $7,500 - $10,000 to bring a non-compliant house up to scratch.

“That is a lot of money, it will hurt some people, it will hurt a lot of people but it's part of the business, part of investing in your property,” said Wellington landlord Lynley Thomas.

“That’s an investment in an asset that generates – over that time – hundreds of thousands of dollars of revenue,” said Mr Twyford.

When those costs were combined with a mooted capital gains tax alongside changes to ‘ring-fencing’ rules, “some people inevitably will decide to get out of providing rental property,” said property commentator Ashley Church.

“That’s fewer homes that are available at a time when we actually need more rental properties,” he said.

“No-one really wants a capital gains tax, but the healthy homes thing is more important for the wellbeing of your tenant,” said Ms Thomas.

Mr Church said it was “absolutely unconscionable” that Housing New Zealand (HNZ) would get four years to meet the new standards.

The Minister said that was due to the number of HNZ properties needing upgrades and a tight labour market.

“The government should be setting an example and being a leader in this area. They’re actually basically buying themselves an extra couple of years when they’re expecting private landlords to front up with those costs essentially now,” Mr Church said.

National’s housing spokesperson Judith Collins said the government was imposing more costs on tenants, on top of already high rents.

“With the State House waiting list now topping 10,000 for the first time, the last thing the Labour Government should be doing is making it more expensive to rent. More cost on landlords will be passed on to tenants,” she said.

“We want tenants to live in good conditions which is why we did a lot of work around this including strengthening rules around insulation.” 

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Landlords will now have to install a heater in the main living room of rental properties and stop drafts that make heating the home harder. Source: 1 NEWS