Landlords would be more likely to insulate if they were able to do it themselves, says the Property Investors Federation.
It was revealed last week that only 5 per cent of private rentals have been insulated under the Warm Up New Zealand scheme.
The Herald on Sunday is campaigning for minimum energy efficiency standards for homes, particularly for those that are rented.
The Warm Up scheme will have insulated 230,000 homes over the first four years it has been in existence but only 26,000 private rentals.
The scheme subsidises 33 per cent of the cost of insulation, or up to $1300, to owners of houses built before 2000. That increases to 60 per cent where the owner or tenant has a Community Services Card.
But the subsidies are only available for approved installers: no DIY.
Property Investors Federation president Andrew King said the Government should make it cheaper and easier to insulate.
He said extending the scheme to subsidise the products would help.
"The industry says you need a professional do a decent job but I don't think it's that hard, really.
"If you put the incentive on the actual material and it didn't have to be so-called professionals doing it, there would be a much bigger uptake."
He said DIY insulation would cost about half a professional job, even with the subsidy.
But Green Party co-leader Metiria Turei said that was not a good idea. "The DIY approach isn't appropriate if government money is being used."
She wants the scheme extended beyond 2014.
EECA is the government partner in the scheme and chief executive Mike Underhill said opening it up to DIY would be a potential minefield.
"This would mean subsidising all insulation, including products that may be used for new-builds, because it would be impossible to know whether it was destined for a new house or a pre-2000 house. This would increase costs for the programme significantly, and unnecessarily."
He said insulation had to be properly installed to be safe and effective.
Mel Orange, of Right House Limited, an insulation provider of the Warm Up New Zealand scheme, said the quality of installation made a difference.
"Even small gaps in the insulation can dramatically decrease overall performance and ensuring you get the insulating material right out to the eaves in the ceiling is very important.
"If only 5 per cent of an area is left uninsulated, up to 30 per cent of the potential benefits may be lost."
'Brainless job' too costly
Geoff Hall is an Auckland landlord with seven rental properties. He supports efforts to improve insulation in rental properties but has found it cheaper to do it himself.
He said installing underfloor insulation in his rental properties cost about half that of an official installer, even with a 33 per cent subsidy,
"It's definitely cheaper to do it yourself, although it's a hell of a job, grovelling around under a house."
Hall doubted there would be quality concerns if the subsidy was extended to insulation materials.
"Underfloor insulation is a brainless job. They could have an inspector come out and charge $100 or something to make sure it's done properly."
Hall was "on the fence" about whether to insulate a couple of his properties and said a DIY subsidy would make up his mind.
In future he would probably hire a labourer to help him. "I'd still get it done a lot cheaper."
But for landlords with tenants with Community Services Cards, the 60 per cent subsidy would make it worthwhile to get the professionals in, he said.