Monday, November 4, 2013

Mike Butler: Rental WoFs, standards, politics



Housing Minister Nick Smith has asked officials to investigate a rental property warrant of fitness scheme, to be trialled on Housing New Zealand properties by early next year. (1) Contractors have already checked state houses looking at the external condition, guttering, roofing, whether doors are securable, whether drains work, and whether there is loose wiring, insulation, or smoke sensors..

The WOF issue was proposed a year ago by the Children’s Commissioner as a measure to combat that favourite vote-catcher of tax-and-redistribute politicians -- child poverty. The Manawatu Tenants Protection Association were the first to call for rental property warrants of fitness, and that was around 13 years ago.

Some news reports have jumped the gun by asserting that a warrant of fitness for rental houses is set to be in place this year, but what the Housing Minister said in May was:

1. That the Government would develop a Housing Warrant of Fitness system, with the support of a Rental Housing Standards Forum, and trial it on Housing New Zealand properties this year.

2. That . . . the Housing Warrant of Fitness will firstly apply to the 69,000 Housing New Zealand properties.

3. That it is also intended that the Housing WoF will then be extended to other social housing providers. The WoF may be further extended to other rental property where the Government is providing a housing subsidy." (2)

Smith said implementing a rental property warrant of fitness would be a complex task that would need to build on existing housing standards work such as the Healthy Housing Index, Lifetime Design, HomeStar, Home Energy Rating, and Housing Improvement Regulations.

So what do all these systems of property rating include?

The Healthy Housing Index pilot study report 2007 (3) was based on an assessment of 102 predominantly 1950s state houses in the Lower Hutt area with 259 occupants targeting Maori, Pacific Island, as well as general occupants.

It aimed to create a Healthy Housing Index (HHI), which indicates housing condition related to the health of the occupants. The five components for an index are: (i) structural soundness, (ii) adequate services, (iii) warmth and dryness, (iv) safety, and (v) protection from external and environmental hazards.

The study aimed to rate the house but not the occupants or the way they might live within that house. Most houses in the study were built in the 1950s, 93 percent had ceiling insulation, 88 percent had fixed heaters. Only 8 percent were rented from private landlords.

Over half (54 percent) of the houses had evidence of mould. There was visible mould in 93 percent of houses with Pacific occupants, and 62 percent of those with Maori occupants. Only 21 percent of the houses in the general sample had mould.

The report included the detailed questionnaire used, including age of house, layout, general condition, dampness, ventilation, wiring, mould, kitchen fittings, doors, windows (how many broken), air-tightness, type, condition and location of stove, ergonomics in kitchen, hotwater cylinder and water temperature, bathroom fittings, slippery bath, toilet, condition of stairs and handrail, lighting, laundry, flooring, interior linings, insulation (ceiling, walls, underfloor), exterior doors, heating (fixed or portable), fire safety, smoke alarms, condition of chimneys, security features, exterior wall cladding, roof type and soundness, spouting and downpipes, drains, site drainage, foundations, garage, decking, fencing, gates, outdoor lighting, exposure to wind, outdoor air quality, exposure to noise.

The second source of housing standards referred to was Lifetime Design, a not-for-profit organisation established by CCS Disability Action in 2006. Its five key principles are: Accessibility, adaptability, usability, safety, and lifetime Value. The form includes optimal height and size measurements as construction guidelines. (4)

More standards come from HomeStar, a comprehensive home rating system aimed to create healthier, more comfortable and energy-efficient living spaces. An initiative of the New Zealand building industry, Homestar provides a free online assessment at www.homestar.org.nz.. The assessment covers insulation, heating, water use, waste, ventilation and indoor air quality, among other things, and calculates a value rating, from one to 10 stars. It also provides information on cost-effective upgrades. (5)

Home Energy Rating provides a checklist to use when considering buying or renting accommodation that looks whether the house is positioned for the sun, insulation in ceilings, walls, or underfloor, whether there is a fixed heating system, type of hot water system, and type of lighting. (6)

Another Home Energy Rating checklist looks specifically at insulation in ceiling and under house, whether there are gaps or damage, dampness, hotwater, cylinder wrap, pipe insulation, and shower flow. (7) And the home energy rating checklist provides a step-by-step tool to identify the opportunities for energy savings in different areas of your home. (8)

The Housing Improvement Regulations 1947 that were reprinted this year details minimum standards of fitness for houses. In these regulations, a habitable room is defined as any room which is used or intended to be used, or, in the opinion of the local authority, is capable of being used, as a living room, dining room, sitting room, or bedroom; and includes a kitchen having a floor area of 80 square feet or more, but does not include a room constructed and used as a garage. (9)

In the absence of any detail, since it has yet to be created, no one knows fitness standards that will be required, the cost of an inspection, what is required to pass a WOF, what is required if a WOF is failed, how frequently WOF inspections would be required, and whether it is a mandatory or voluntary scheme.

Any WoF that requires properties to be brought up to the current building code with insulation professionally installed under dwellings and in walls, with double-glazing on windows, it would likely be that it would be more profitable for property owners to redevelop their land with new, own-your-own housing, thus decreasing the supply of rental accommodation.

If a WoF extends to recipients of the accommodation supplement, it would necessarily include all private rentals, since the accommodation supplement was intended to enable beneficiaries to afford to live away from state house ghettoes, and tenants move around frequently. If so, the scheme could make those tenants too costly and landlords would only rent to workers, sending beneficiaries back to the “hood”.

There have been frequent allegations that landlords are lining their pockets with the accommodation supplement, despite the fact that the supplement is a fraction of the rent, exists as a top-up, and is paid to the tenant.

A worrying development was when Minister of Social Development Paula Bennet told Q&A while supporting rental WoFs and opposing increases to the accommodation supplement, that "often the effect is it’s not going into the individual’s pocket or that vulnerable family; it’s going into the pockets of the landlord." (10)

Mould has become an issue during the past 10 years and coincides with an influx of migrants from warm countries that lack a winter with temperatures going down to freezing. These migrants tend to keep their dwellings sealed up during the winter to stay warm. Without daily ventilation and without removing the condensation build-up, mould quickly takes over.

One mould issue spotted during the inspections of Housing New Zealand properties is that the installation of extra insulation to meet current standards, mould increased in properties with concrete block firewalls because the warmer interior increased the surface temperature differential on the surface of the concrete thus increasing condensation.

Any WoF inspection that focuses on mould would mean that it would be in the property owner’s interest to remove tenants who fail to ventilate before WoF inspections.

One reason for the regular appearance of calls for a rental property warrant of fitness is that politicians think they will win them votes. During this year’s local body elections, incumbent Dunedin mayor Dave Cull exploited cold student flats to raise his profile while campaigning for a further term.

He promoted a bill for Parliament that would give the council the power to enforce a warrant of fitness on all rental properties in the city. Green Party housing spokesperson Holly Walker also saw votes in it and gave the idea energetic support. (10)

Sources
1. Warrant of fitness programme for rentals, October 18, 2013, Radio NZ, http://www.radionz.co.nz/news/national/225053/warrant-of-fitness-programme-for-rentals
2. Council considers WoF for all rentals, One News, July 19, 2013. http://tvnz.co.nz/national-news/council-considers-wof-all-rentals-5514731
3. Healthy Housing Index Pilot Study, March 2007. http://www.healthyhousing.org.nz/wp-content/uploads/2010/01/Final-report-HHI-pilot1.pdf
4. Lifemark Design Standards assessment form. http://www.lifemark.co.nz/Libraries/Resources_library/Lifemark_Design_Standards.sflb.ashx
5. Homestar, http://www.eeca.govt.nz/news/homestar-goes-live-1-10-star-comprehensive-home-rating-system-kiwi-homes 6. What to look for when renting or buying. http://www.energywise.govt.nz/sites/all/files/buying-or-renting-checklist-may-2010.pdf
7. Checklist. http://www.eeca.govt.nz/sites/all/files/eeca_checklist.pdf
8. Home energy rating checklist. http://www.energywise.govt.nz/how-to-be-energy-efficient/how-energy-efficient-are-you
9. Housing Improvement Regulations 1947, reprint 2013-10-31 http://www.legislation.govt.nz/regulation/public/1947/0200/latest/DLM3505.html
10. Bennett: ‘I’m an advocate’ for Warrant of Fitness on rental housing, http://nz.news.yahoo.com/a/-/top-stories/19656764/bennett-i-m-an-advocate-for-warrant-of-fitness-on-rental-housing/
11. Council considers WoF for all rentals, One News, July 19, 2013. http://tvnz.co.nz/national-news/council-considers-wof-all-rentals-5514731

1 comment:

Perron said...

I find it disturbing to see... 'There have been frequent allegations that landlords are lining their pockets with the accommodation supplement'. The irony is that many tennants use it to supplement their income stream. Having been around the property management arena for a while it is frustrating and alarming to see tennants front up to WINZ for handouts for bond, advanced rent etc, then upon moving on the bond is re-funded to the tennant. Often the tennant will re-apply to WINZ for the bond and advanced rent for their next rental.

While there are some landlords whom prefer to be slum-lords, generally it is in the best interest of landlords to look after their asset. After all the rent paid is often just enough to cover expenses (mortgage, rental insurance, property taxes, maintenance etc)so the only real gain is when the property is sold. If the house is in a poor state it will sell for a poor value.

Perhaps more effort should be placed on education of tennants, empowering them with a checklist and the knowledge of what to look for and ask for. This demand alone will increase the conditions of alot of rentals, and the checklist would be looked at as 'best practice' by landlords. This would also help to value the rental amount of the property, helping to improve transparency of cost.

The biggest contributor to poor condition housing is simply the housing shortage itself. When demand out-strips supply then tennants are simply left with few options when deciding on a house to rent. Quite simply, once the good ones are gone you take what's left for fear of missing out completely.

What is needed is an encouragement to investing in the property rental market. Increase the supply of houses will lift living conditions purely by the fact that landlords like to attract good tennants. With the restrictions recently placed on home ownership (and by default on housing investment)by the Reserve Bank I fear we are doing the opposite and detering