"Ultimately it's the landlords' business decision but we're erring on the side of caution by advising property managers that it's best not to work with non-complying landlords," Norwell said.
She said REINZ was already seeing some investors exiting the rental market due to costs associated with complying with the Act.
"Them leaving is the cumulative effect of so many changes, including healthy homes, and landlords think they are not making enough money to stay in the business."
Norwell said the industry had done a good job and estimated 80 to 90 per cent of landlords meet the standards required by MBIE.
Landlords could expect random checks and audits.
A third of the rental property owners under the Property Investors Federation use a property manager.
The federation said it was fair to say some landlords assumed the property manager was managing the property for them and should have actually told them what the regulations were and if they in fact met them.
Under the Act, landlords with more than one tenancy may face separate damages for each property that doesn't comply.
They will still need to install insulation that meets the correct standard.