The insulation industry says landlords aren't insulating rental properties fast enough and tens of thousands of properties could fail new standards with a deadline now less than two years away.

The Insulation Association of New Zealand, which claims it represents more than 90 per cent of the industry, says a survey of members has returned "alarming" results.

The government had estimated 180,000 properties would need new insulation to comply with a July 1, 2019 deadline to make rental homes warm, dry and safe.

Landlords not complying face a fine of up to $4000. But limited landlord demand meant only 10,000 had been done, says association president Stu Henwood.

Advertisement

"This leaves a mountain of about 170,000 uninsulated rental houses to be insulated in less than two years," he said.

At its peak, the insulation industry was insulating up to 60,000 houses a year.

"So there's a serious risk many landlords will miss out and risk penalties when the deadline for the new tenancy regulations kicks in," Henwood said.

Another problem was ceiling and underfloor insulation being installed properly to meet safety and efficiency rules.

Association members assessed more than 36,000 rental properties and almost 60 per cent didn't comply with the new Residential Tenancy Act guidelines, Henwood said.

"There is going to be a huge backlog of work needing professional assessment and subsequent installation."