Rotorua: New insulation standards sees some property managers, landlords part ways

Median rents in the Bay of Plenty reached an all-time high this year as landlords prepare for new legislation to take effect. One housing expert says the insulation standards are just the beginning and landlords need to be prepared to meet the "tsunami" of new legislation coming in over the next few years. Zizi Sparks reports.

Ministry of Business, Innovation, and Employment figures reveal the median rent in the Bay of Plenty reached an all-time high of $448 a week in May, before dropping slightly to $441 in June but still up 4.5 per cent from $422 in June last year.

In Rotorua the median rent in June was $391 up 4.8 per cent from $373 in June 2018.

The figures come as some property managers sever ties with landlords who don't meet the new insulation standards which came into effect on July 1.

Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys said the group did have to cut ties with some landlords over standards but not many, fewer than five.

"There are some situations we've got where we've had to do that but typically we've been working with landlords for the last year or so and most have come into line with new regulations.

"There are challenges in certain areas but across the board, we're comfortable where we got to. With some, we've had to say sorry we can't continue."

Nik Gregg, the manager of regionwide Sustainability Options, said some of the homes they had visited were still not up to scratch. He said of the eight homes the organisation had visited about four needed work.

"Most property managers have nailed it. The homes that we are seeing that require work are generally directly managed by landlords.

"There's certainly a reasonable number that still require insulation."

Gregg said a properly insulated home was "critically important". Sustainability Options does home assessments of people's living conditions including heating and insulation.

"If we want to achieve warm, dry, more comfortable homes for all of New Zealand first base or ground zero is getting insulation in place."

He said the insulation laws were just the first step and meeting new Healthy Homes legislation standards was the next phase.

"This is groundhog day. We've got landlords going I can see the tsunami coming and I'm just going to watch, wait and stand on the shore."

But it wasn't just up to landlords to keep homes healthy, Gregg said it also came down to tenants knowing how to warm and dry their homes.

Healthy Homes legislation comes into play on July 1, 2021 and includes new rules around ventilation of bathrooms and kitchens, heating and insulation, and moisture and drainage.

Rotorua Property Investors Association president Debbie Van Den Broek said all of the landlords in the association had got their properties insulated and were focused on the Healthy Homes legislation.

"I think more property managers have spent the last two years getting landlords to bring properties up to new legislation.

"If a landlord has failed to even start getting it done by now, they are not a very good landlord.

"All landlords should have and all houses should have heating especially in Rotorua. It's a crime not to provide a bit of warmth."

Van Den Broek said she started getting her properties up to scratch in 2011 and the association was focused on the new standards coming in the next few years.

Russell Hardie owner-operator Donna Russell said she hadn't dropped any landlords but was aware some property managers did have to.

"It's a bit of a catch-22 for management companies because it's our income.

"We've been preparing for this a long time and been preparing our landlords for this."

"We're been auditing our properties for months and months and months to make sure everything is done."

Russell said it had been challenging to get properties up to insulation standards but that was because insulation companies were flat out.

"Some jobs booked in January and February are still not done."

Real Estate Institute of New Zealand chief executive Bindi Norwell has previously said property managers with clients who hadn't insulated their rentals needed to decide whether to continue working with those landlords.

"There are substantial fines for non-compliance, for property managers as well as landlords, not to mention the potential brand and reputational damage.

"Ultimately, our advice is that property managers don't continue to work with any client that has no intention of meeting the standards."

OneRoof editor Owen Vaughan said some landlords were assessing whether having a rental was worth it following the changes but the changes meant high standards and better living conditions.

"If landlords can't afford to make changes they should get out of the game.

"It's better to have a landlord that can take care of tenants and properties."

Vaughan said it was the best business practice for property managers to get away from anyone breaking the law.

Landlords who don't meet the standards set out by the Ministry of Business, Innovation and Employment are in breach of the Residential Tenancies Act may have to pay a penalty of up to $4000.

Landlords who still don't comply after paying the penalty may face further action.