Insulation of Rental Properties

Over the last 6 – 12 months we are seeing a lot of rental properties coming onto the market for sale. These are typically a combination of singular rental houses, and blocks of 3 and 4 flats which have been owned by individual investors for a long period of time. Most of these properties we are inspecting are in a poor condition and in many cases require substantive maintenance undertaken in an effort to bring them up to a satisfactory standard.

There are several reasons why I suspect we are seeing these being marketed for sale  now, and these include:

• Growing concern over methamphetamine contamination of their rental properties
• The housing market has reached a peak and they want to ‘cash up’ and bank their tax free gains
• Compliance costs associated around new Residential Tenancy Act requirements

It is the latter suspicion I want to focus on in this article. Typically many investors (not all) will ‘milk’ their investment by achieving maximum rental returns, and spending minimum investment in upkeep and maintenance.

New laws introduced on the 1st July 2016 saw the requirement for long life smoke alarms to be located within 3m of bedroom doors, a current insulation statement, and a fixed method of heating source made mandatory on every rental property. You’ll be amazed at the amount of non-compliance we identify in our building inspections, with many owners citing ‘ignorance’ of these regulations.

From the 1st July 2019 all investors and owners of rental properties will need to meet or exceed new standards of insulation to make their properties healthy and warm. A landlord who fails to comply with these regulations commits an unlawful act and may be liable for a penalty of up to $4,000. These regulations see New Zealand split into 3 zones:

In properties where the property is already insulated and the insulation is in reasonable condition the minimum under floor requirement will be R1.3 in all zones, with ceiling insulation meeting a minimum of R2.9 in Zones 1 & 2; and R3.3 in Zone 3.

Dwellings built after 1978 should have met thermal requirements under the older Building Permit or Consent regulations and should have had a minimum of R0.9 in subfloors, with ceiling insulation meeting R1.9 in timber framed homes, and R1.5 in masonry construction. Where these ceiling levels of insulation are 100mm or more in depth then this is considered satisfactory, however where the insulation has slumped as most of it does then it will require topping up where it is between 70 – 100m in depth. Where the level of insulation is below 70mm it will require a new retrofit.

The requirement to insulate these properties within the next 2 years we believe is encouraging rental investors to quit their properties while the market is buoyant and leave the next investor or owner meet the  burden of achieving compliance.

With tens of thousands of properties requiring an insulation upgrade it is becoming apparent that with less than 2 years left to meet this standard many won’t. Time will tell.

For an inspection on your homes insulation give us a call today on 0800 487 884!

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