Minimum standards for rental properties

The Government has now introduced the expected Minimum Standards for Rental Properties legislative proposal.

The proposal is in response to a high profile call for a full Warrant of Fitness for rental properties, to which the NZ Property Investors' Federation (NZPIF) has been vigorously objecting.

The NZPIF is therefore very glad that Government have rejected a WOF and instead is looking to introduce four proposed amendments to the Residential Tenancies Act (RTA):

• a new requirement for smoke alarms in all residential rental properties
• new requirements for ceiling and underfloor insulation in residential rental properties (with specific exemptions), to be phased in between 2016 and 2019, with accompanying disclosure requirements for landlords
• strengthened ‘retaliatory notice' provisions, to increase tenants' confidence in exercising their rights, together with strengthened enforcement provisions for the Ministry of Business, Innovation and Employment to act in the most serious cases
• changes to enable faster resolution of tenancy abandonment cases, to allow rental properties to be re-let more quickly.

The last two proposals were a surprise, however. Retaliatory notice provisions are aimed at preventing landlords from issuing a 90 day notice to end a tenancy in response to a tenant exercising their tenancy rights. The strengthening of this provision is in response to lobbying by tenant groups. The potential cost to the landlord of getting this wrong has now increased to $2,000. Information on this issue is outlined in a separate article within the July newsletter.

The fourth proposal is a point which the NZPIF has been talking to Government to for a long time – that is getting faster action to re-let a rental property following abandonment by the tenant. Information on this issue is covered in a separate article within the July newsletter.

Housing Minister, Nick Smith, has said that "the proposed RTA amendments will create new regulation-making powers allowing smoke alarms and insulation requirements to be prescribed in regulations. I will seek Cabinet agreement to the final regulations, following public consultation, in early 2016". More information here

The key parts of the new proposals are compulsory insulation and smoke alarms. The NZPIF membership survey shows that members are ahead of the proposed changes, with 92% of the rentals they own already insulated.

The proposal is that insulation in the ceiling and underfloor areas of rentals must be installed by 1 July 2019. The standard is to be the level introduced in 1978 and there are exemptions where it is impossible or impractical to insulate.

Landlords will be required to make a declaration on the tenancy agreement identifying the type and level of insulation in the property.

Government will spend $1.5m over the next four years educating landlords and tenants about the new regulations, plus information to tenants aimed at helping them keep their rentals warmer and dryer. This is an initiative that the NZPIF have been suggesting for many years. We hope that members will receive copies of the educational material to give to their tenants.

Minister Smith believes that where a tenant considers a property doesn't meet the new standards (or existing requirements under the Housing Improvement Regulations such as functioning water supply), they would be able to use existing processes to take a case to the Tenancy Tribunal.

The Government is, however, going to expand the Ministry of Business Innovation and Employment's ability to examine rental properties and take owners to the Tribunal if they believe the property doesn't meet acceptable standards under the Act.

A separate article will examine this and other aspects of this part of the proposals.