Category Archives: Blog

Commonly Overlooked Expenses That Property Investors Can Claim

Correctly claiming expenses is something every responsible business owner should be doing, and investment properties are no exception. So, what exactly can you claim for? Below are three commonly overlooked expenses that property investors can claim for on their rental income.

Travels to the property

Even if you are using an agent, many property investors like to visit periodically. It may be to see the scale of maintenance work required or simply tagging along to the agent’s routine inspection to get a better sense of certain wear and tear items. All these travels, back and forth, are claimable expenses.

Gifts for tenants

Many savvy properties investors know that a happy tenant is an asset. Making sure you manage a positive relationship with your tenants goes a long way. That’s why some landlords take the time and effort to prepare a small gift for new tenants when they move in to their home for the first time. Or, for existing tenants, many landlords prepare a small gift when the holiday seasons draw near. These gifts can be (and should be) claimed as expenses by property investors.

Agent fees

More often than not, being a property investor is a busy job all on its own. You can be forgiven for trying to avoid the hassle of keeping every single receipt and invoice for expense claiming. Using a property manager, several minor expenses such as advertising, background checks, credit checks, fees for drawing up tenancy agreements, and court costs can all be wrapped up into one easily trackable agent fee. This agent fee is tax deductible, so essentially you’re wrapping all these small tasks into one simple one.

Further information

There are many more expenses that you can claim for:

  • insurance
  • rates
  • accountant fees
  • repair and maintenance
  • fees for arranging a mortgage to finance the rental property
  • fees for drawing up a tenancy agreement
  • mortgage valuation
  • court and other legal fees
  • eviction fees
  • mortgage repayment insurance
  • depreciation
  • legal fees involved in buying a rental property

You can also deduct interest on money you have borrowed to buy your rental property. You cannot deduct this if you have used some of the money:

  • for something else; or
  • to top up the mortgage for another purpose.

Expenses you cannot deduct from your rental income are:

  • capital expenses
  • purchase price of a rental property
  • mortgage repayment principle
  • additions or improvements to the property
  • repairing or replacing damaged property, if the work increases property value
  • real estate agent fees charged as part of buying or selling the property
  • depreciation on the rental’s land or buildings
  • your time cost when you do repairs and maintenance work
  • legal fees involved with selling the rental property (unless you’re in the business of providing residential rental accommodation)

The difference between repairs and improvements can be complex. If you are unsure about whether work done on your property is repairs or improvements, talk to a tax agent.

Healthy Homes

There is another question that is commonly asked by property investors, recently. That is: “can I claim the expenses incurred while trying to meet the Healthy Homes Standards?

The Inland Revenue Department (IRD) answers that question as follows: “costs of a revenue nature are generally deductible in the income year they are incurred and these may include the costs of repairing items that would otherwise meet the standards if operational or in a reasonable condition… (or) minor additions or alterations that do not change the character of the building.” This is good news for property investors and they should definitely claim any such expenses. If you’re looking to find out more details about this matter specifically, you can always refer to this document supplied by the IRD.

For further information on claimable expenses in general, check out the resources at IRD’s official website.

Post-COVID-19 Strategies for Landlords – You Need to Act Now

The COVID-19 emergency has transformed many industries and sectors. The property and private rental market were not immune to these transformations.

There are some realities that haven’t changed, not least that people will always need somewhere to live. This gives our industry as a whole a high level of resilience, resilience that other sectors and industries don’t have.

That said, individual landlords can still be impacted by the transformation that is taking place.

The Short-Term Rental Example

Just look at what is happening with the short-term rental market as an example. With tourism closed down, many property owners who adopted the Airbnb business model had no choice but to change direction.

This has flooded the rental market with excess properties, both apartments and houses. As a result, tenants now have more options, which could put downward pressures on rents.

This is not helped by the wider economic situation where people have lost income and jobs.

Plus, the impact of the above scenario will spread beyond short-term rentals into the market more widely.

What You Should Do to Protect Your Investments and Income

A lot of the advice and guidance for landlords up until this point of the COVID-19 emergency was about getting through the lockdown situation, following the law, and working together with tenants.

We now need to look to the future. What will your portfolio look like in 12- or 24-months’ time? What about your rental income? What about profitability?

To protect all three – portfolio, income, and profitability – all landlords in New Zealand must adapt to new strategies. Here are some of the things you should consider in post-COVID-19 New Zealand.

Focusing on the Long-Term

Low-risk investors who focus on the long-term and who have strong balance sheets will have opportunities over the coming months. Predictions are that house prices will fall. Combine this with low-interest rates, and there could be the option for some investors to expand their portfolio.

Changing Mindsets

Property managers, landlords, insurance companies, and others involved in the private rental sector will need to consider a change of mindset. This includes moving from an adversarial approach with tenants to one built more on relationships and trust-building.

The most successful property managers are also likely to evolve more into an asset management role. So, instead of the endless rotation of inspections and new tenancy agreements, the service will become more about helping landlords maximise the overall profitability of their portfolios.

After all, net rental income is only one part of a property portfolio’s profitability calculation.

Changing the Approach to Inspections

Following on from the above point, our industry needs to use the changed mindset to take a new and modern approach to inspections.

The existing system may have suited a previous era, but it is not fit for purpose in the post-COVID-19 era.

Some ideas on this topic have already been floated by others in the industry. They warrant much wider consideration. This includes:

  • Remote inspections replacing in-person inspections
  • Less frequent inspections
  • More flexible approach to inspections where the frequency is based on a risk assessment, i.e. the riskier the tenant, the more frequently inspections take place

Utilising Smart Home Technologies

Even before COVID-19, other industries were going through change driven by customer demand and the availability of new technologies. These changes are known by various terms including the Internet of Things, Industry 4.0, and digital transformation.

The private rental sector has some catching up to do, and this is the ideal time to do so. By embracing smart home technologies, you can improve the service you offer as a landlord to tenants while also protecting and enhancing your investment.

There are challenges, most notably privacy, but it is an area worth exploring further, given the potential benefits.

Adapting to Change

The central theme of the above is that things are not going to be the same in the months and possibly years ahead. In fact, the sector might never go back to the way it was before COVID-19. We need to adapt to these changes with minimal delay.

Please don’t hesitate to contact us on 022 010 7099 for further information on this.

Healthy Homes Guarantee Bill – A Guide for Landlords

The new Healthy Homes standards that are part of the Healthy Homes Guarantee Bill are now law, so they apply to all the residential properties in your portfolio. How exactly will this impact you and what should you do next?

There is a two-year implementation period which means the properties you own don’t have to conform to the new standards until 1 July 2021. However, this doesn’t mean you should ignore the new rules. Acting quickly now will save you time and money while also ensuring your tenancies continue to run smoothly.

The New Healthy Homes Standards

The new Healthy Homes standards focus on making rented properties warmer and drier. Therefore, they cover heating, insulation, ventilation, moisture/drainage, and draughts.

The New Standards for Heating

Here are the main points you need to know:

  • There must be a fixed heater in the main living area of all rented homes. This heater must be capable of heating the living room to at least 18 degrees Celsius even on cold days. This is the recommended minimum temperature according to the World Health Organisation.
  • In addition, heaters that are costly to run, inefficient, and/or unhealthy will not meet the new standards. Examples include open fires, gas heaters without flues, and electric heaters with a capacity that is more than 2.4 kilowatts (except heat pumps). Your rented properties can still have these types of heaters, but you will have to install additional devices to meet the new standards.
  • It’s likely you will need to install a heat-pump or wood burner in most of your properties. Smaller heaters may be acceptable in smaller properties like apartments, although they still have to be fixed and the minimum size is 1.5 kilowatts.

The Government is providing a calculator that you can use to find out the capacity of heater you need for each of your rented properties. A professional property management company can also help give you this information.

The New Standards for Insulation

  • The homes you rent out must have ceiling and underfloor insulation
  • If you are installing new insulation, it must meet the Building Code standard that was introduced in 2008
  • If the properties in your portfolio already have ceiling and underfloor insulation, you have to ensure it is a minimum of 120 millimetres thick

The New Standards for Ventilation

  • Kitchens and bathrooms in the houses you rent must have extraction fans
  • Extraction fans must also be fitted to any other room that has a shower, bath, or cooker
  • Your rented properties must have windows that can be opened in all bedrooms as well as the living room, dining room, and kitchen

The New Standards for Moisture and Drainage

  • If any of the homes in your portfolio have an enclosed subfloor space, you must ensure there is a moisture barrier installed
  • The drainage, downpipes, and guttering in the homes you rent must be effective enough and in a good enough condition to stop water from getting into the house

The New Standards for Draughts

You must make every effort to stops draughts in the houses you rent out. This includes:

  • Blocking up unused fireplaces and chimneys
  • Fixing or blocking gaps or holes in walls, doors, floors, windows, and ceilings

Your Responsibilities

Remember, under the new rules, it’s your responsibility to demonstrate your properties meet the new standards whenever you start a new tenancy agreement or renew an existing one.

What Should You Do Now?

The first step is to assess the properties you currently own to determine the work required to bring them up to the new Healthy Homes standard. A property management company like us at Oaks Property Management can be instrumental in this process, ensuring you properly prioritise and plan.

You may also need to reassess your current investment strategy. The direction of travel for legislation in regard to rented properties is going only one way, so you need to make sure your investment strategy is in alignment.

The best advice is to speak to an expert today to ensure you stay on the right side of the law while still maximising your yield.

Benefits of New Builds Versus Existing Builds

There are lots of factors to consider when deciding on the types of property to invest in. The location of the property is important, as is the style and character. The state of the property is also essential as the cost of doing upgrade or repair work will eat into your profits.

Whether the property is a new build or an existing home is part of the equation too. Many investors choose existing builds as they are often in prime locations, they can have a character that is appealing, and they can be less costly to buy than new builds.

However, the new Healthy Homes legislation recently introduced has changed the landscape for property investors and landlords. As a result, new builds are set to become an increasingly popular option.

Overview of the New Healthy Homes Standards

The new Healthy Homes Standards, which became law on 1 July 2019, aim to increase the standard of homes in the rental market in New Zealand. This includes ensuring homes have a proper heater, that rented homes can effectively retain heat, and that rented homes are free from damp and moisture.

The highlights of the new standards include:

  • The main living room of the properties you rent must have a fixed heater that can heat the room to 18 degrees Celsius
  • Your properties must have appropriate ceiling and floor insulation
  • There must be adequate ventilation in your rented properties including extractor fans in kitchens and bathrooms
  • You must stop draughts by, for example, blocking gaps under doors or blocking up unused chimneys
  • The gutters and downpipes must be in good condition to ensure water doesn’t get into the houses you rent out

The Problem with Older Properties

As a property investor, you will know that investing in older properties usually requires a commitment to complete upgrade or repair works. You will factor this work into your calculations to ensure you get a good return on investment.

The new Healthy Homes standards now add another element to the mix, however.

The standards are the right approach as it’s important that the quality of rented properties in New Zealand is improved.

That said, you need to make sure your business is viable and continues to deliver an adequate return. Therefore, if older properties make up all or part of your current portfolio, or you are considering making new investments, you can view the new Healthy Homes standards as an opportunity.

The New Build Opportunity

This opportunity is to take a fresh look at your investment strategy with a view to moving away from investing in older properties to instead investing in new builds. This is because new builds are likely to meet the standards set out in the Healthy Homes legislation out of the box.

In other words, when you invest in a new build, you won’t have to do any further work to ensure the house is warm, healthy, and comfortable to live in. The new build may cost you more, but over the medium and long-term, you will get a better return on investment.

You will also reduce the risk of tenants raising disputes with you in relation to the Healthy Homes standards, plus you will improve your reputation as a landlord who not only follows the letter of the law, but the spirit of the law as well.

The publication of the new Healthy Homes legislation requires immediate action. Part of that should be an assessment of your investment strategy with advice from property management professionals like the experts here at Oaks Property Management.

Healthy Homes Standards – What You Need to Know

On the 1 July 2019, new rules came into place in New Zealand that impact both landlords and the roughly 600,000 people who live in rented properties. The rules are known as the Healthy Homes Standards.

The property management company you use in Auckland should have expert knowledge of tenancy law in New Zealand, so will be able to give you direct advice. You can contact us at Oaks Property Management if you need further help.

That said, it’s also important that you have an understanding of the new rules. Let’s answer some specific questions including:

  • Why are the standards being introduced?
  • Who do the standards apply to?
  • What are the new standards?
  • When do they come into force?

What Are the New Standards Being Introduced?

Since 2017, New Zealand has had a legislative framework aimed at improving the standard of rented properties in the country. The goal is to make rented homes warmer and drier to improve comfort levels for tenants, reduce their heating costs, and ensure homes are healthy to live in.

After all, cold, damp, and draughty homes can cause serious illnesses as well as being unpleasant.

Who Do the Standards Apply To?

Private landlords, Housing New Zealand, and providers of social housing must all ensure the properties they rent out conform to the new standards.

As tenants live in the affected houses, they are also impacted by the new rules. Specifically, tenants currently living in properties that fall below the new standards should see improvements as their landlords carry out upgrade work.

What Are the New Healthy Homes Standards?

The new Healthy Homes standards fall in into five main categories:

  • Heating
  • Insulation
  • Ventilation
  • Moisture and drainage
  • Draughts

Heating

The new standards require all rented properties to have a fixed heater capable of heating the main living room of the house to 18 degrees Celsius. That said, if the heating device is inefficient, costly to run, or is unhealthy, it won’t meet the new standard even if it is capable of heating the room to the required temperature.

Insulation

Rented homes must also have ceiling and underfloor insulation. The specifics of the standards depend on whether there is currently insulation in the property:

  • Existing insulation – existing insulation must be at least 120 millimetres thick
  • Newly installed insulation – new insulation must meet the Building Code standard introduced in 2008

Ventilation

Kitchens and bathrooms in all rented homes must have extraction fans. Extraction fans must also be fitted to any other room that has a shower, bath, or cooker.

Furthermore, rented properties must have windows that can be opened in all bedrooms as well as the living room, dining rooms, and kitchen.

Moisture and Drainage

The drainage and guttering in rented properties must be effective enough to stop water from getting into the house. In addition, in rented homes that have an enclosed subfloor space, there must be a moisture barrier.

Draughts

Draughts must be stopped throughout rented houses. This includes blocking up unused fireplaces and chimneys as well as blocking gaps or holes in walls, doors, floors, windows, and ceilings.

When Do the Standards Come into Force?

The new Healthy Homes rules became law on 1 July, but private landlords have until 1 July 2021 to bring their properties up to the required standard.

Summary of the Standards

As you can see, the standards centre on preventing moisture from building up in homes as well as ensuring homes can be efficiently and effectively heated. When the rules are in full effect, the standard of rented properties in New Zealand will improve.

Rental Property Guide

Rental property guide recommendations to landlords and investors.

Compulsory insulation statement in all tenancy agreements from 1 July 2016 to disclose level of insulation at the property.
Working smoke alarms are compulsory in all rental homes Compulsory insulation in all rental homes by 1 July 2019.
Both underfloor applies insulation. To ceiling and Get this done early to avoid last minute rush.
Insulation property must statement be attached of the in agreements.

Click here to download complete guide

The Asbestos Regulations – What You Need to Know

Key Points

  1. As a residential landlord you are the person conducting a business or undertaking (PCBU) for your rental property. You may also need to rely on other PCBUs – such as property managers and building contractors – to coordinate, collaborate and cooperate when they share overlapping duties with you.
  2. Under HSWA you have a duty to identify asbestos and prepare an asbestos management plan for work involving a risk of exposure to respirable asbestos fibres. For example, exposure is likely to occur from dust created when drilling or cutting into asbestos-containing materials.
  3. The risk of exposure depends on the kind of work you’re planning to do. Types of work that create risk may include renovations, refurbishments or demolition work.
  4. If the work creates a risk of exposure in an area of the property you must ensure asbestos is identified and an asbestos management plan is prepared.
  5. The duty only applies:
    • when you are planning and carrying out the work
    • to the area relevant to the work creating a risk of exposure to respirable asbestos fibres.

The Asbestos Regulations – What does the law say?

The primary legislation governing work health and safety in New Zealand is the Health and Safety at Work Act 2015 (HSWA). This policy clarification sets out when residential landlords have a duty to identify asbestos and prepare an asbestos management plan.

Under HSWA landlords must ensure that, when work is carried out at their property, it is done safely and without endangering workers or others, including tenants. Landlords must identify asbestos in the workplace and document plans for managing its risks in an asbestos
management plan, if there is a risk of exposure to respirable asbestos fibres.

What Are Your Responsibilities?

Specifically, you have direct responsibilities regarding asbestos while work is being carried out on any of your properties. This could be maintenance, upgrade, or renovation work. Your responsibilities are to your tenants as well as the tradespeople you bring into the property to carry out work. The Health and Safety at Work Act does not apply, however, to your rental property in general, i.e. when there is no work going on.

It applies during periods of maintenance, upgrade, or renovation work because the Health and Safety at Work Act treats you as a business. Your technical definition as a landlord under the Act is a Person in Charge of a Business or Undertaking. As you have this role, you have health and safety obligations in regard to any work carried out in your home.

So, if an electrician is installing a new light and disturbs asbestos in the process, you might be liable.

What Do You Need to Do Now?

The following applies if you know asbestos is in one of your properties. It also applies if you should reasonably know there is asbestos in your property, i.e. deliberate ignorance may not be a valid excuse. So, if any of your properties were built during the time period above, you should take the following steps:

  • Clarify whether asbestos is present or may be present. If it is or you strongly suspect it is, you should identify where it is and what condition it is in. You may need to bring in professional assistance for this part of the process.
  • Create a management plan for asbestos that is currently stable and does not need immediate removal. This includes mitigating risks to tenants and tradespeople while work is ongoing in your property. You must also ensure tradespeople are properly trained on the risks of asbestos. It is also important this plan is kept up-to-date on an ongoing basis.
  • Remove any asbestos that is considered to be immediately harmful

The exception to the above is when you are carrying out a major refurbishment on one of your properties that contains asbestos. In this situation, you must go further than the above by bringing in licensed professionals to identify, plan, and deal with the asbestos in the property.

What Are the Implications for Non-Compliance?

Apart from the serious health and safety risks to tenants and tradespeople working in your home, you may face significant fines if you are found to be in breach of the asbestos regulations in the Health and Safety at Work Act. Sanctions are criminal and start at $30,000 for failing to engage in the process and fines can go up to $1million and also involve jail for very serious breaches.

For further questions & discussion, please contact Oaks Property Management Ltd at enquiries@oaksproperty.co.nz.

What Landlords Need to Know About Meth Contamination

Before becoming a landlord, methamphetamine was probably something you only ever encountered in movies and on the news.

As a landlord it is your responsibility that you must provide a clean property and check for any signs of ‘P’ before renting it out.

The law around meth contamination goes further than simply providing a clean property for tenants to rent. In fact, it doesn’t matter how visually clean a property is if it is contaminated by meth. This means if landlords rent out a property that is contaminated by ‘P’, they are breaching their obligations under the Residential Tenancies Act 1986, as well as other legislation such as the Building Act and the Health Act.

Tenants have rights if they suspect meth contamination during their tenancy. Specifically, if a tenant believes your property has been used as a meth lab and hasn’t been properly cleaned, they can ask you to clean it. The can also end the tenancy.

The police and other local authorities have a role too. If they suspect the property is contaminated with Meth, they will inform your local council.

So, what are your obligations regarding meth contamination? Before a tenancy, they include:

  • Checking for any signs of ‘P’
  • Testing
  • Cleaning/decontamination and testing again

During a tenancy, they include:

  • Checking/testing
  • Cleaning and testing again

Checking for Meth Contamination

According to the Auckland Regional Public Health Service, the following warning signs may indicate your property is being used as a meth lab:

  • Chemical smells that are not normal
  • The presence of unusually high amounts of chemicals like solvents and acids
  • Equipment used to create stain glass windows
  • The presence of glass containers with tubing fitted
  • The presence of an unusually large number of cold tablet boxes
  • Unexpected gas tanks
  • Stains on sinks, drains, or toilets that look like chemical stains
  • Staining on walls, ceilings, floors, and other surfaces that is a yellow-brown colour

In addition to using the above warning signs, you can also get low-cost testing kits (DIY kits) which will give you an indication of whether there is any presence of Meth in the property.

Testing for Meth Contamination

If you suspect your property is contaminated by meth, you can get it professionally tested. This will confirm the contamination level before you bring in professional cleaners for decontamination process.

Of course, you can skip testing at this stage to move straight to cleaning. If you strongly believe meth is present, this may be the cheapest option in the long-run.

Cleaning and Testing Again

If your property is contaminated by meth, you must get it professionally cleaned by a company with experience of doing similar work. Often, the cleaning/decontamination will be covered by your insurance cover however its strongly suggested to review your insurance policy ensuring such events are covered.

Once cleaned, you will need to get the property professionally tested to confirm it is suitable for renting.

Other Things You Need to Know About Meth Contamination in Your Rental Properties

  • During a tenancy, you can only test the ‘rented property’ for meth. This means you cannot test the personal belongings of the tenant.
  • You should only proceed with testing for meth if the tenant agrees. If they don’t agree, you should take legal advice before proceeding.
  • Make sure your insurance includes cover for meth problems to protect you against the cost of cleaning and professional testing if meth is discovered. Remember, some insurers cap the amount of claim they will pay in the event of a meth contamination.
  • When making a claim on your insurance, you may have to prove the meth contamination happened during the time the insurance was in place. To ensure you have the information to prove this, you should test your properties regularly.
  • Remember that while there is no legal requirement to test a property for meth contamination before a new rental agreement, your insurance company may insist on it.
  • Make sure your tenancy agreements include a clause relating to meth testing.

Real Case – Auckland landlord suffers $99k meth damage

A landlord of an Auckland property says she suffered $99,958 of damage to her place in Hillsborough when it was rented. http://nzh.tw/12007370

Meth de-contamination can be costly process, even though you are not responsible for it occurring. Therefore, it is important you as landlords understand your obligations, so you can act quickly and take the necessary steps if and when it happens.

For further questions & discussion, please contact Oaks Property Management Ltd at enquiries@oaksproperty.co.nz.

Smoke Alarms in Your Rental Properties – Your Obligations

You have lots of obligations and responsibilities as a landlord, but one of the most important is ensuring you install working smoke alarms in your properties. You must also ensure they are the right type of smoke alarm as well as ensuring you install them properly.

Doing so is a legal requirement which means you can be taken to a tenancy tribunal if you do not install smoke alarms. In one recent case, a landlord had to pay $2,000 in exemplary damages because he didn’t have smoke alarms installed. Fines for non-compliance can be as much as $4,000.

Your Legal and Moral Obligations

The legal requirement for installing smoke alarms comes from the Residential Tenancies Act. It says all landlords must provide accommodation to tenants that is warm, dry, and safe. By not installing smoke alarms, you will fail to meet the third obligation of providing a safe home for tenants and their families to live in.

The installation of smoke alarms is about more than a legal responsibility, however. This is because most people in New Zealand, including landlords, believe there is also a moral responsibility on all residential property owners to ensure they install working smoke alarms in the homes they rent out.

After all, research shows that 89 percent of domestic fires which result in a fatality are in rented properties.

It is an undeniable fact that smoke alarms save lives, so it is important your properties have them installed.

What is the Law?

What exactly does the law require you to do, though? Firstly, any property you rent must have at least one working smoke alarm on each level of the property.

In addition, there must be a smoke alarm either in every bedroom of the house or within three metres of each bedroom door. That means you are likely to need more than one smoke alarm on each level of the property if those levels have multiple bedrooms.

There are specific requirements regarding the type of smoke alarm you must install too. This includes:

  • It must be a photoelectric smoke alarm. Photoelectric smoke alarms are better at detecting smouldering fires and can alert those living in the home quicker. In addition, photoelectric smoke alarms generate fewer false alarms.
  • The smoke alarm must be hard-wired into the property’s electrics or it must have a battery with a usable life of eight or more years.
  • The smoke alarm must meet all international standards.

Also, you must fit the smoke alarm according to the instructions issued by the manufacturer.

You do not need to replace a smoke alarm at the start of a new tenancy, providing it works and is still within the expiry date of the manufacturer.

Tenant Responsibilities

Who is responsible for maintaining the smoke alarm during the tenancy? At the start of a new tenancy, you must ensure there are enough smoke alarms installed and you must ensure they are all in good working order.

Your tenants have responsibilities too. This includes:

  • Tenants cannot disconnect the smoke alarm or remove it
  • Tenants cannot damage the smoke alarm either
  • If the smoke alarm is battery-powered, it is the tenant’s responsibility to replace the batteries when they run out
  • The tenant is also responsible for reporting problems with the smoke alarm to you

The risks of not installing smoke alarms are too great, and the law is unambiguous. Therefore, the residential properties you rent must have smoke alarms.

For further questions & discussion, please contact Oaks Property Management Ltd at enquiries@oaksproperty.co.nz.

The Healthy Homes Guarantee Act – What Landlords Need to Know

The Healthy Homes Guarantee Act, a landlord, what does it mean for you? This is not an easy question to answer as the bill was light on specifics – the Government will not give details on those specifics until it completes a consultation. While there are a lot of things that remain unclear, there are some things we do know.

What is the Healthy Homes Guarantee Act?

The aim of the Health Homes Guarantee Act is to ensure all tenants in New Zealand live in warm, well-ventilated, and dry rental properties. There are two key dates to remember regarding the new law:

  • 1 July 2019 – this is when all new tenancies must adhere to the new, as yet unspecified, minimum standards
  • 1 July 2024 – this is when all your rental properties, regardless of when the tenancy started, must adhere to the new minimum standards

The Government’s consultation on the minimum standards for rental properties in terms of warmth, ventilation, and dryness is ongoing. This consultation includes landlords like you as well as building experts and tenants. At the end of the consultation, the Government will publish the minimum standards the properties you rent must meet.

We also know there will be grants available to help you bring your properties up to the required standard. These grants will be for eligible landlords and will be worth up to $2,000.

What Changed with This Legislation?

The date of 1 July 2019 is probably already familiar to you. This is the date previously set as the deadline for you to ensure your rental properties have proper insulation.

The previous requirements, however, excluded around 100,000 homes. This is now unlikely to be the case as the new Act will probably cover all rental properties. In addition, the Healthy Homes Guarantee Act is expected to cover draught-proofing, ventilation, and dryness requirements as well as ensuring your properties are warm.

Why Is the Government Doing This?

Most landlords in New Zealand run reputable businesses and act responsibly. In other words, they already provide homes for their tenants that are safe to live in. There are some unscrupulous landlords, however, that don’t.

In those cases, tenants are forced to live in properties that are cold, damp, and draughty. This leads to sickness, particularly respiratory illnesses in children and the elderly. In the worst cases, people can die.

The goal of the Healthy Homes Guarantee Act is to stop these terrible rental situations from happening by setting minimum standards that all landlords must adhere to.

What Are the Questions That Remain?

There are several, not least the affordability of heating homes. After all, you, as a landlord, could provide heating in a rental property but that doesn’t mean the tenant will have the money to turn the heating on.

From your point of view, the biggest questions are about what the final minimum standards will look like. There is no clear answer to that at the moment.

What Should You Do?

Of course, this leaves an obvious question – what should you do now. After all, there is a deadline approaching and you will probably need lead-in time if you have properties that require remedial work.

The best advice is to continue with your plans to meet the insulation standards for rental properties, i.e. ensure all the homes you rent are fully insulated for new tenancies starting from 1 July 2019 and for all tenancies by 1 July 2024.

By doing this, you will be in a good position to move forward once the Government publishes the new minimum standards the Healthy Homes Guarantee Act is intended to produce.

We have special deals for insulating your rental properties, for further questions & discussion, please contact Oaks Property Management Ltd at enquiries@oaksproperty.co.nz.