Sunday, October 7, 2018

Mike Butler: Why extra standards for rentals?


Few could argue against the value of warm and dry housing but many could criticise the way the Peters-Ardern Government is imposing extra standards on rental property.

Housing and Urban Development Minister Phil Twyford is about to require owners of rental property to install expensive heaters, add an extra layer of insulation, require extractor fans in kitchens and bathrooms, a polythene sheet under the floor to stop rising damp, and draught-stopping tape around windows and doors.

Touted as a “healthy homes guarantee”, only occupants of New Zealand’s 588,700 rental properties appear to need healthy homes because the work is not required for our 1.1-million owner-occupied dwellings.

These requirements were sneaked past MPs by way of shell legislation named Healthy Homes Guarantee Act, which became law on December 4, 2017, which said there would be standards covering the six areas but didn’t say what the standards were.(1)

That meant MPs and the public had no means of assessing the legislation. Although feedback is sought, regulations will be imposed and without a champion for rental property owners in Parliament there is little anyone can do about it.

Standards have existed for housing in New Zealand, at least since the Housing Improvement Regulations 1947, and probably for longer.(2) As well as requiring a kitchen, living room, bedroom, bathroom, toilet and laundry, and for heating, every living room must be fitted with a fireplace and chimney or other approved form of heating.

Bathrooms and toilet rooms were required to have a window opening to the exterior for ventilation.

The heating requirements were uncontroversial until 2004, when new National Standards for Air Quality banned open fires in urban areas in a quest to rid the atmosphere of tiny particles called PM10, and urban dwellings were forced to get an approved wood-burner or switch to electric or gas heaters.(3)

Insulation didn’t become a requirement until April 1, 1978, when the Local Government Amendment Act came into force.

That remained uncontroversial until pressure from the Green Party prompted the National-led Government to launch on July 1, 2009, a $340-million-dollar multi–year programme that provided funding for insulation retrofits and heating grants.(4)

That turned into compulsion via the Residential Tenancies (Smoke Alarms and Insulation) Regulations of 2016 which for timber-framed homes in most of the North Island required R1.5-rated insulation in the ceilings and R 0.9 under floor, to be compliant by July 1, 2019, with exemplary damages of $4000 payable to the tenant for failure to comply. (5)

So, you can see that there are substantial requirements and penalties already for rental properties without additional standards.

There is a perception that an insulated property is a warm property. However, insulation does not warm, it reduces heat loss by about 30-35 percent through the ceiling and roof, and about 12-14 percent through the floor.

Energy savings are minimal. In New Zealand, heating is generally only required during the winter, which means that insulation can reduce an annual power bill by five percent.

So, the current drive to get owners to install heaters to enable occupants to heat dwellings to the World Health Organisation “healthy” standard of 18C or 20C, with the presumption that this may only be achieved by installing a $1500 heat-pump air-conditioner in every rental property living room and possibly a further heater in every bedroom.

Aside from the question of whether human beings are at peril if the temperature indoors is less than 18C, a simple test with a $20 electric fan heater and a thermometer shows that such temperatures are readily achieved without spending megabucks.

But the main issue is that the reason why any property remains cold in the winter is because the heater has not been turned on.

And the reason why the heater has not been turned on is because the person in the cold property is quite likely terrified of a hefty power bill. This is because the price of electricity roughly doubled in the 10 years following 2004.

Fans costing around $500 installed that extract moisture-laden air from kitchens and bathrooms ventilate a dwelling in much the same way that opening windows and doors do. Why have some people apparently lost the ability to open windows and doors, and will these people use extractors if they are installed?

A couple of years ago, when I asked a tenant why a shower room remained damp despite an extractor fan that was wired to the light switch, I was told that she preferred to shower in the dark to reduce her power bill.

Mandatory requirements to install polythene sheeting under floors to stop rising damp irrespective of whether the property is damp or not is expensive overkill, especially when it costs $397.30 for 50 metres installed.

That particular installer initially quoted on polythene if required and explained that it was only required for concrete-rim foundations where there was inadequate airflow. Six months later it became a mandatory requirement.

The requirement for draught-stopping tape around windows and doors where there is a gap of 3mm is ridiculous. That would mean all wooden joinery would need the tape that would have to be removed for painting and replaced.

In 28 years of renting property I have only had one request for draught-stopping and have seen a handful of places in which tenants have installed tape.

If the additional standards are necessary to avert health issues, as the justification goes, why has the Peters-Ardern Government not included owner-occupied dwellings? This is probably because there would be an outcry if they did, in much the same way that there would be an outcry if a capital gains tax included owner-occupied homes.

Successive governments appear to view rental property owners as a soft target because we will pay for heating and insulation, we can be used as scapegoats, and generally we don’t fight back.

The standards are presented as if they are based on evidence but this is questionable. The Minister says in the foreword of the Healthy Homes Discussion Document that “cold and damp rental homes affect a large proportion of New Zealanders”.

But data on the condition of New Zealand housing is limited to a Building Research Association of New Zealand survey of just 491 properties, when New Zealand has 588,700 rental properties and 1.1-million owner-occupied dwellings. The Minister’s assertion is speculation.

The standards discussion document includes six pages of academic references which includes a claim that insulation retrofitting is expected to cost $600 million, with benefits of $2.10 for each dollar of this cost.(6)

However, examination of that claim showed a calculation error in the cost-benefit analysis and the actual benefit for each $1 spent on insulation was just 28c. (7)

Of course, owners are expected to pay the costs and the benefits accrue to the Government in terms of reduced hospitalisation costs.

Government MP Tamati Coffey told a meeting on tenancy law changes in Rotorua last week that it was essential to get landlord "buy in" for any changes. He must have rocks in his head. “Buy-in” is difficult to imagine considering the extent to changes that include, as well as the six additional standards already discussed:
1. Current insulation requirements with a compliance deadline of July1 next year and $4000 fines,

2. Tenancy law changes that would remove an owner’s right to end a tenancy agreement and ban fixed-term tenancies,

3. A ban on letting fees as of December 12 this year.

4. A looming capital gains tax.
On top of this is the never-ending stream of damaged rental properties with no one willing to answer the question that if wilful damage is listed in the Crimes Act with a penalty of up to seven years in jail, why don’t those who trash tenancies face jail time.

Most rental properties in New Zealand are owned by people who have one or two properties. There is not a lot in it for them. They have no one in Parliament speaking up for them. They can either pay for the new requirements, ignore the Government, or sell up and take their capital gain while it is still tax-free.

Perhaps the Peters-Ardern Government has not yet worked out that if owners sell up, if there is a crisis now, what sort of a crisis will there be then?

Have your say on the extra standards by going to http://tenancieswar.nz/healthy-homes-legislation/ Feedback must be in by October 22, 2018.

Mike Butler, who owns rental property, is the spokesman for a new group named Stop the War on Tenancies.

Sources
1. Healthy Homes Guarantee Act, http://www.legislation.govt.nz/act/public/2017/0046/25.0/DLM6627702.html
2. Housing Improvement Regulations 1947. http://www.legislation.govt.nz/regulation/public/1947/0200/latest/DLM3505.html
3. National Standards for Air Quality. https://www.mfe.govt.nz/air/regulations/national-environmental-standards-air-quality/about-nes
4. Government cuts Warm-Up programme that saves lives. http://www.scoop.co.nz/stories/PA1605/S00567/government-cuts-warm-up-programme-that-saves-lives.htm
5. Insulation regulations. https://www.tenancy.govt.nz/maintenance-and-inspections/insulation/compulsory-insulation/
6. See https://www.beehive.govt.nz/release/tenancy-law-changes-include-insulation-and-smoke-alarm-requirements
7. See https://breakingviewsnz.blogspot.com/2016/02/mike-butler-insulation-benefit-grossly.html

2 comments:

Anonymous said...
Reply To This Comment

Good Day - I think there is an error in your 'sources', as #7 is the same as #6, and I can find no reference to a calculation error in the cost-benefit analysis there.... Am I missing something?

Mike Butler said...
Reply To This Comment

Thanks Anonymous. Error in source 7 now corrected. Many thanks.

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