Government strengthens residential tenancy laws

The Government has announced plans to strengthen residential tenancy laws. Photo / Doug Sherring

• All rental properties must be insulated by July 2019, though exemptions apply to properties where it is physically impractical to retrofit insulation.
• Smoke alarms must be installed in all rentals from July 2016, but tenants will be responsible for replacing batteries and notifying landlords of defects.
• New powers to prosecute landlords for breaking tenancy regulations, particularly where there is risk to tenants' health and safety.
• The changes also ensure tenants can take concerns to the Tenancy Tribunal without fear of retaliatory evictions.

Every rental property in New Zealand will have to be insulated within four years, Government has confirmed.

Housing Minister Nick Smith announced plans this morning to strengthen residential tenancy laws, including requirements for landlords to provide smoke alarms and insulation, and to declare the standard of insulation on tenancy agreements.

"The new law will require retrofitting of ceiling and underfloor insulation in rental homes over the next four years," Dr Smith said in a statement.

Should all rental homes be insulated? Have your say

The requirement would apply from July for Government-subsidised social housing, and from July 2019 for all other rentals including boarding houses.

There would be some exceptions, such as in houses where it was physically impossible to retrofit insulation.

Smoke alarms would be compulsory from July.

"Regulations will make landlords responsible for ensuring an operational smoke alarm is in place, and tenants responsible for replacing batteries or notifying landlords of defects," Dr Smith said.

"The Ministry of Business, Innovation and Employment will have new powers to investigate and prosecute landlords for breaking tenancy laws as part of these reforms, particularly where there is risk to the health and safety of tenants.

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"The changes will also ensure tenants can take concerns to the Tenancy Tribunal without fear of being evicted for doing so."

Dr Smith said landlords would save money in the long run from investing in insulation.

"The insulation retrofitting is expected to cost $600 million, with benefits of $2.10 for each dollar of this cost. "

The minister said smoke alarms would save the lives of three people every year.

180,000 New Zealand homes required insulation and 120,000 homes needed smoke alarms.

"The health benefits of this will be reduced hospitalisations from circulatory and respiratory illnesses, reduced pharmaceutical costs, and fewer days off work and school," Dr Smith said.

The Government said the average cost of retrofitting both ceiling and floor insulation was about $3300.

Landlords could apply for a subsidy through the "Warm up New Zealand: Healthy Homes" scheme, but funding for that programme was only guaranteed to run till next June.

The new smoke alarm standards required a minimum of one working smoke alarm in a hall or similar area, within 3m of each bedroom door.

In self-contained sleep-outs or caravans, at least one working smoke alarm would be needed, in line with Fire Service recommendations.

Based on the limited information available, officials estimate that about 270,000 private residential rental properties are inadequately insulated.

These include 150,000 rental properties occupied by low-income tenants, but exclude properties where it is not practicable to insulate due to physical design of the property.

Since 2001, the Government has spent $500 million to insulate all state houses where practicable and since 2009, subsidise retrofitting of insulation in 280,000 private residential properties.

Based on the 2010 Branz House Condition Survey, officials estimate that up to 70,000 private sector rental properties cannot have under floor ceiling retrofitted and up to 120,000 cannot have under floor insulation retrofitted.

Officials estimate 180,000 privately tenanted rental properties will require retrofitting of insulation in the period up to July 2019.

A Cabinet paper showed Dr Smith deemed a "Warrant of Fitness" trial for homes less cost-effective "for tenants, landlords or society" than the law changes announced today.

The Cabinet paper showed properties sold and immediately rented back to the former owner-occupier for up to 12 months would be exempt from the new laws.

Properties a landlord intended demolishing or substantially rebuilding within 12 months of a tenancy starting could also be exempt, as long as landlords provided evidence of relevant resource or building consent.

The minimum insulation standards were consistent with national requirements introduced in 1978.

"We are not wanting to require the replacement of insulation installed since then. The greatest benefits are obtained from this first minimum amount of insulation," the Ministry said in a related document.

Meanwhile, landlords will be able to take control of abandoned properties faster than the law currently allowed.

Dr Smith said the new laws would create a ten-day process introduced to enable "re-tenanting" of abandoned properties.

He said the process currently took up to six weeks, leaving houses empty and landlords out of pocket.

"These reforms are to be supported by a $1.5 million information campaign aimed at improving compliance with existing and new tenancy law requirements, as well as providing guidance on the practical ways that homes can be made healthier," the minister added.

Tenants' Protection Association respond

Tenants' Protection Association (Auckland) coordinator Angela Maynard was thrilled by the changes which would help thousands of Auckland tenants keep safer and warm.

But regulations around insulation and fire alarms were simply common sense which should have been introduced years ago, she said, and the changes did not go far enough.

"It's way past when it should have happened and not before time. Any landlord who hasn't provided smoke alarms in my opinion is remiss."

Dr Maynard said as house prices rocketed across Auckland and wages failed to keep pace, countless residents were being shut out of homeownership and forced to rent for life. She wanted better tenure security for tenants like those in place in some overseas countries, notably Germany and Switzerland.

This would make Kiwi renters' lives more pleasant and mean long-term rental arrangements were considered more acceptable and safe, "rather than something that is considered an alternative to the norm".

"So people know that the house is not going to be sold out from under them.

"Living in a house and seeing it as your home rather than always having to look over your back, [worrying] that at any time it could be sold. There's just no security in that and because a lot of people are going to have to rent for their lifetime there should be means for them to be able to do that comfortably and stay in one area ... for community stability."

Dr Maynard wanted enforceable regulations around the sale of rental properties to protect tenants' long-term rights.

"If you're going to commit to becoming a landlord and taking on a tenant then you have to commit to a certain period of time."

Tenants' Protection Association (Christchurch) manager Helen Gatonyi said the "superficial changes" were a good start which could signal the beginning of a significant change for New Zealand tenants.

She welcomed moves to insulate homes and make smoke alarms mandatory. But she cautioned that thousands of properties would either be exempt from insulation rules because of their physical layout, or retro-fitting would make little difference because the properties had broken windows or failing electricity.

Ms Gatonyi said one of the biggest changes was addressing "retaliatory notices" - where residents were given 90-day eviction notices by landlords simply for reporting faults with the property.

The association had seen a big increase in 90-day notices in recent years and wanted them banned. In some case landlords used the notices to get rid of tenants so they could put up rents.

"That's not retaliatory, that's just greed."

Ms Gatonyi also welcomed changes requiring landlords to stipulate the level of insulation on a property.

"All of this is contributing to better upfront arrangements and better information for tenants when they're entering into tenancy agreements.

"Landlording is a business and like any other business they should be required to meet the business standards."

Labour and Greens react

Labour and Greens have been lobbying Government to introduce warrants of fitness for rental properties.

Green Party co-leader Metiria Turei said today that insulation and smoke alarms alone would not fix the "appalling state of rental stock in this country".

She reiterated that Government should introduce a wide-ranging WOF with enforceable minimum standards.

READ: Q&A: Tenancy law changes

Mrs Turei also urged National to re-commit to its Memorandum of Understanding with the Greens, which included subsidies for home insulation.

Labour's housing spokesman Phil Twyford said the new policy was a step in the right direction.

But he said insulating a cold house without requiring modern, efficient heating still left tenants at risk of respiratory disease.

"Sadly this is the kind of grudging half-measure that's become the trade mark of National's housing policy, where initiatives are only announced when they are forced by public opinion," he said.

Mr Twyford also wanted broad-ranging reform of rental laws to encourage greater security of tenure and longer-term leases.

Fire service welcome changes

A Fire Service spokesman said it welcomed the requirement to install smoke alarms in rental properties because renters were more at risk than owner-occupiers.

"About 90 per cent of house fire fatalities are in rental properties, which often do not have working smoke alarms. This measure will give renters greater warning and protection."

NZUSA: 'Must get law right'

The national student union NZUSA has "cautiously welcomed" today's announcement, but says the government must get the law right before getting the unions "sign off".

NZUSA President Rory McCourt said minimum standards were long overdue and requiring retrofitting of ceiling and underfloor insulation over the next four years would both improve the health of tenants and save the lives of children and chronically sick New Zealanders.

"We're pleased that the government has finally acknowledged the serious problem of houses that make us sick. Now the challenge will be to get the law right, making sure all rental houses have insulation, heating and a way tenants can know if it's safe to live in."

The union would like to see the proposal improved by including a cost-effective heating such as heatpumps in the requirements and for houses to be rented only after being independently certified as not damaging to the health of tenants.

"An important first step"

Auckland deputy mayor Penny Hulse said the move was "a reasonable first step".

"These proposed changes are an important step in lifting the standard of rental properties, while ensuring tenants have greater rights," she said.

"Still, we believe the Government has a clear role in ensuring rental properties meet the standard, rather than the onus being on tenants.

"Enhanced standards will contribute to an improvement in rental housing stock, enabling people to live healthy, safe and productive lives as well as strengthen families and communities and reduce the impacts of child poverty. We would encourage the Government to be still more proactive on this issue."

The new standards rely on tenants making a complaint about the state of their rental accommodation, Ms Hulse said, and given the shortage of rental housing in Auckland there was a continued risk that tenants would be unwilling to complain.