Latest Market Statistics
Read Now

A plea for a common sense approach 

By Paul Lochore FREINZ

Do I think that all tenants are entitled to live in warm, dry homes, rather than the alternative – mouldy, damp houses? Absolutely, it would be inhumane to think otherwise. And ensuring that our children live in healthier houses is vital. But does this mean I back the concept of a warrant of fitness for all rental accommodation? Yes, I do, but only if common sense is applied in the way in which it is established and implemented.

According to former Labour leader Andrew Little, 42,000 people turn up at hospitals every year suffering from preventable respiratory conditions. Of course this is completely unacceptable. His Healthy Homes Guarantee Bill requires minimum standards to be set for heating, insulation, ventilation and drainage in rental homes. First introduced in October 2015, by the end of July 2017 his Bill had passed its second reading by only a narrow margin. National and Act opposed the Bill, even though the National Government has stated that ceiling and under-floor insulation will become compulsory in all rental homes from 1 July 2019. That’s a long time to wait for all the children currently suffering from respiratory diseases as a result of poor-quality housing.

A Labour/Green/NZ First coalition would no doubt see the Bill passed. However, at the time of writing there’s still a big question mark as to whether they’ll be in government.

Insulation statements have been compulsory on all tenancy agreements signed since 1 July 2016. Landlords are obliged to disclose whether there is insulation in the rental home, where it’s located and its type and condition, so that tenants can make an informed decision.

Many rental homes are old housing stock and so naturally the majority don’t meet the standards of the updated Building Code. Having lived in Wellington and Auckland and been in real estate for the last 54 years the concern I have is that the majority of houses in central, southern and eastern suburbs of Wellington are 60-100 years old and the same goes for the older parts of Auckland.  The majority of those homes would unfortunately fail a current warrant of fitness and a very large percentage of them are rental properties.

Some of these homes are in very good condition and have been well maintained, however due to the age of them bringing them up to today’s standards required by the two city councils would cost a small fortune, and the cost of dealing with both councils would also increase the cost substantially.  This would virtually make it impossible for these landlords and owners to comply.

As well as this problem the majority of the housing corporation houses would also fail the test.

Does this mean the government of the day has the money to upgrade all of these properties, let alone the will to do it?  The outcome of all this means the tenants will be thrown out on the street, there will be a massive shortage of homes and what is available will have substantial rent increases.

If a new rental housing warrant of fitness applies mainly to ensuring that there is effective insulation, heating, ventilation and functional smoke alarms and that there are no leaks or vermin, then that equates to being a responsible, ethical landlord/lady. Plus, other fundamentals need to be in place, such as ensuring there are sufficient power points and a functioning oven and shower. Installing ceiling and under-floor is manageable, relatively affordable and can be carried out over a short time period without tenants having to move out and find alternative accommodation.

But if the warrant of fitness for rental accommodation also required that all drainage and wiring is brought up to current code standard – or, worse, the entire house comes under scrutiny, then it’s a different story.

There’s a difference between making it a legal requirement for all rental properties to be insulated and requiring every rental home to be brought up to the standard of the new Building Code. If the rental warrant of fitness seems too stringent and unreasonable, owners may very well quit their rentals, because the cost of compliance would be considerable and very time consuming. Any extensive renovations would require tenants to move out – for an unknown amount of time. There’s an acute shortage of building labour and of quality construction materials. Construction companies are going bust.

As council consent processes for approval to proceed and for code of compliance certificate sign-off are generally very slow, the expenses for the property owner increase progressively. It’s my experience that home owners, particularly in Auckland, are wary of dealing with the council and experiencing their legendary delaying tactics. Applying for a building consent and then a code of compliance is to enter into unknown territory – you will lose any certainty of outcome, budget or timeframe. Owners of leaky homes or apartments soon become only too aware of this hurdle.

Maintaining a rental property involves considerable expense – mortgage, rates, insurance, body corporate fees and maintenance. The capital gain is the primary incentive.

But if investing in a rental property becomes an unappealing proposition, investors will take their money elsewhere. And if owners of rental accommodation quit the market it will result in a reduction in rental housing stock. With fewer rental properties available, rents will then inevitably increase. A well-intentioned but misguided approach to trying to secure warmer, drier, safer accommodation for tenants would then have backfired. In Auckland the average rent for a three-bedroom home is already around $560 to $650 per week.

I’m delighted to see that Wellington Council has taken the lead and from late August this year has introduced a voluntary rental warrant of fitness in an effort to improve the standard of the city’s rental properties.

If we truly want the nation’s tenants to no longer live in damp and mouldy houses, then let’s push for some common sense in the design and application of a rental warrant of fitness.

Up to Date

Latest News

  • Understanding the Real Estate & Economic Cycle

    4th May 2023. Picking exactly where we are in the economic and property cycle is always a challenge. Historically, a complete circumnavigation of the clock below can be 8 – 10 years, depending on the location, type of property, economic factors, and demand … Read more

    Read Full Post

  • A Better Understanding Of Property Insurance

    At a point in time that we reflect, following two of the most major weather events to occur in Auckland and NZ ‘s history, I thought that a blog on house and/or commercial property insurance is worthwhile reading. Clearly, under-insurance is a significant issue that can have serious … Read more

    Read Full Post