Thursday, July 9, 2015
Mike Butler: Insulation, alarms latest kneejerk
This is the latest of a line of apparent National Party crackdowns on property owners that included a mini capital gains tax on properties sold within two years, and loan-to-value requirements on banks to reduce lending to property investors.
A more extreme proposal from Treasury, before the last Budget, was charging Auckland landlords an annual tax of 1 per cent of the value of their investments to combat rising house prices, to be paid directly to Auckland Council. (2)
That would have meant writing a cheque for $5000 for every $500,000 Auckland dwelling you may own irrespective of the debt. Fortunately for Aucklanders, that did not proceed.
Smith’s insulation and smoke alarm utterance comes after years of pressure from the Child Poverty Action Group, the Children’s Commissioner, the Fire Service, and most recently by Labour’s Phil Twyford desperately trying to lift the Labour vote from 25 percent, Smith has caved in at the expense of property owners.
Under plans to tilt the Residential Tenancies Act further against property owners, all tenanted properties will require floor and ceiling insulation by mid 2019, while government-subsidised social housing operators will require insulation by next July.
From next year all rentals will also need to have smoke alarms, and Smith said that where new alarms were being installed they would have to be more expensive long-life smoke alarms which retail at around $40 each.
Announcing that the Government would not be pursuing plans for a wider warrant of fitness on rentals, Smith said a trial of Housing New Zealand properties in 2014 showed that many failed for "pedantic" reasons.
A trial of 144 rentals across Christchurch, Auckland, Tauranga, Wellington, and Dunedin early last year found a failure rate of 94 percent.
The report I did titled Rental property warrant of fitness a costly mistake showed dodgy academic research and laughable cost-benefit analyses.
Requests under the Official Information Act and to the Ombudsman failed to get Smith to release details of the impact of a warrant-of-fitness scheme on the rental market.
New Zealand has 1.7-million occupied dwellings, including 480,000 rental properties of which 69,000 are owned or leased by Housing New Zealand and the remainder owned privately.
The rental property sector is a $6-billion industry and comprises three percent of GDP, which means tinkering would have a substantial impact.
There are two elephants in the room about houses being cold.
One is that complaints about the cold occur during the three months of the year called winter when, surprise, it is cold.
The other is that tenants on limited incomes are wary about turning a heater on for fear of a whopping power bill.
The price of electricity has doubled over the past 10 years with the government, as the major owner of power-generating companies, takes the major share of that profit.
In his press conference announcing the new requirements, Smith repeated the fiction that his initiatives will mean warm houses while in fact insulation reduces energy costs by five percent and does not warm a house – a heater is needed for that.
Smith does not apparently require curtains in rental properties despite 25 percent of heat loss being through the glass in windows.
He does require ceiling insulation, which makes sense since up to 35 percent of the heat escapes through the roof, as well as underfloor although only 14 percent is lost through the floor. Another 25 percent escapes through the walls.
Nothing has been said about whether there is a required R-rating and whether there are different requirements for the different regions – such as thicker insulation for colder areas.
The highly reported death last month of toddler Emma-Lita Bourne that prompted a coronor to opine that the house could have been to blame kicked up a firestorm of outrage from Twyford, the Children’s Commissioner, and the Child Poverty Action Group.
News reports of this death were unique in that they did say that Emma-Lita’s mother did not turn on the heater because she feared a whopping power bill.
Twyford, especially, refused to acknowledge that if a heater was not used and windows not opened, even an insulated house would stay cold and grow mould. Twyford is also in the habit of proclaiming that “New Zealand houses are rubbish”.
I do wonder what Labour-voting building industry workers think of that.
Four deaths in two house fires last November prompted the Fire Service to demand compulsory smoke alarms in rental properties, even though at the time those demands were made it was not known whether or not sensors were in those dwellings.
The Fire Service says that 55 percent of all house fires and 89 percent of all fire deaths occur in rentals, which make up 28 percent of total housing stock.
They say early warning increases safety and minimises damage. I say care and common sense is even more important for safety and damage minimisation.
Statistics for 2013 show a total of 16 fire deaths, in 3205 structure fires, with smoke alarms present at 1220 of those fires, and with 338 alarms failing to operate.
The trend is towards fewer fires, with 4287 house fires in 2002, and 28 deaths.
The requirement to put a $40 smoke sensor to replace existing smoke sensors in each of 480,000 rental properties at a cost of $19.2-million, to property owners, looks like a nanny state over-reaction which would greatly benefit those who sell $40 smoke sensors.
It’s a bit of a worry that policy appears to be made based on uninformed scare stories in the media. Voters and taxpayers do expect a bit more courage and clear thinking from both politicians and bureaucrats.
Smith’s insulation requirement looks like Labour MP Twyford’s Healthy Homes Guarantee Bill without the requirement to install a heater plus the Green Party's insulation policy.
The current government’s haste to implement policies put forward by Labour and the Green Party could leave National voters wondering why on earth they supported them.
1. Landlords required to insulate and install smoke alarms to rental properties, http://www.stuff.co.nz/business/70096597/landlords-required-to-insulate-and-install-smoke-alarms-to-rental-properties
2. Treasury proposed Auckland-specific housing tax to send 'dramatic signal', http://www.stuff.co.nz/national/politics/70106489/treasury-proposed-aucklandspecific-housing-tax-to-send-dramatic-signal
at 4:50 PM