Nearly half of the state houses assessed in a warrant of fitness trial were classed as "high risk" and in need of urgent repair, a new report shows.
The assessment of 400 Housing New Zealand properties across the country also found nearly one in 10 houses had significant mould problems and one in three had neither insulation nor heating.
The Government confirmed plans on Thursday to introduce minimum standards for rental properties, focusing on compulsory insulation and installation of smoke alarms.
Housing Minister Nick Smith ruled out a broader warrant of fitness scheme for rentals, saying that it was more efficient and pragmatic to focus on "real improvements".
He said the WOF trial, which took place in March and April in 2014, showed that the scheme was costly and time-consuming. Each inspection, which looked at 49 criteria, took between 60 and 90 minutes and cost $225.
Many homes failed to get approval because of "pedantic" criteria such as the absence of window stays or glass safety stickers, Dr Smith said.
But the report also showed that 48 per cent of state houses in the trial were classed as "non-compliant -- urgent repairs".
This meant they needed repair within two days or tenants might need to vacate the property. It also meant they failed "high risk" criteria, which was defined as affecting the "immediate and sustained safe and healthy use of the house".
Based on the results of the trial, the cost of repairing all of Housing New Zealand's 60,000 faulty properties would cost around $34 million, or $576 per non-compliant house.
Labour and Greens have lobbied for a WOF to be introduced for rentals, and MPs from both parties have put member's bills in the ballots which would make this change.
Under the proposals announced by the Government last week, all state-subsidised social housing will have to be insulated by next July, and all rentals will have to be insulated by 2019.
WOF TRIAL
Fully compliant - 17 properties (4 per cent)
Non-compliant, repairs needed within 2 days - 193 properties (48 per cent)
Non-compliant, repairs needed within 10+ days - 129 properties (32 per cent)
Non-compliant, low risk - 63 properties (16 per cent)
(Source: Ministry of Business, Innovation and Employment)