Landlords face a $4000 fine if their properties are uninsulated on July 1 – but insulation companies say time’s run out and if they haven’t done it by now, bad luck. The Spinoff's Don Rowe reports

Landlords face a $4000 fine if their properties are uninsulated on July 1 – but insulation companies say time’s run out and if they haven’t done it by now, bad luck. The Spinoff's Don Rowe reports
INSULATION COMPANIES SAY LANDLORDS HAVE RUN OUT OF TIME TO MEET THE GOVERNMENT'S JULY 1 DEADLINE. (PHOTO: GETTY).

By Don Rowe*

Two weeks out from the Residential Tenancies Act insulation deadline the industry has reached total capacity, with businesses warning there is “absolutely no way” New Zealand’s housing stock will be insulated on time.

Anne Fletcher, owner-operator of Auckland Insulation, said her company was facing unprecedented demand compounded by manufacturer delays with a workload exceeding anything she’d seen in almost 30 years in the industry.

“Some manufacturers have really had a huge issue in April and May, we were putting orders in then that we didn’t get until June,” she said. “We’re facing a massive workload. Everyone is trying really hard, and the main thing that annoys me is when property managers with 40 houses ring me and want to send a list of 40 properties through. Where have you been for the last four years?

“I’ve been doing this 28 years and seen a lot of companies come and go, and we’ve never seen anything like this. We’ve doubled our numbers of staff and everything, but the problem is doing the quoting and assessing – I’ve got 28 years’ experience I can’t inject into a new employee, because there are so many different factors to allow for. Not every house is a square box.”

The regulations, passed by the National government in 2016, require landlords to install underfloor and overhead insulation in rentals unless it was “either physically impossible to insulate, or would require major renovations to do so” by July 1 on penalty of a $4000 fine.

2018 MBIE report estimated there were between 126,000 and 220,000 houses left to insulate as of December last year, with industry capacity for 50,000 to 60,000 properties each year. Now, six months later, businesses across the country are almost incapacitated by the workload, and MBIE says there are no extensions available under the RTA as it would be “unfair to those landlords who have acted in time to do the right thing”.

“The requirement to insulate was widely publicised in 2016 when the changes to the RTA were made, and Tenancy Services has worked hard to ensure landlords are aware of their responsibilities by running an extensive information and education campaign,” said Peter Hackshaw, acting national manager, Tenancy Compliance and Investigations.

“Landlords have had ample time and information to get the required work done and failing to comply is not only unlawful, it also exposes tenants to potential harm by not having a home that is warm and dry enough during the winter months.”

Researchers from the University of Otago estimate poor housing costs the country more than $145 million annually in preventable illness and injury. In 2015 Otara toddler Emma-Lita Bourne’s death was attributed in part to the damp, cold state house in which she lived. Last year Dr Lance O’Sullivan reported visiting freezing homes with water running down the internal walls, where children were contracting third-world illnesses.

Anne Fletcher said her firm was receiving too many inquiries to respond to on a daily basis, and both her landline and cellphone were almost unusable.

“We’re getting easily in excess of 30 emails coming in a day, and the phones are going off constantly – they’re calling right now even as I talk to you. But it’s good to have the legislation in place and especially for investors overseas, by all means ping them, but don’t sting mum and dad landlords for $4000 – we all have to have patience.”

Fletcher also expressed doubts Tenancy Services would have capacity to prosecute the thousands of landlords who won’t make the deadline.

Graham Cammock, owner-operator of Hamilton’s Premier Insulation, said the industry had been warning of a bottleneck for more than a year.

“We’re overcapacity. We’ve been bringing on more staff for the last six months and a lot of people have left it too late. As an industry we were signalling that 12 months ago. It was a case of ‘it’s not going to happen to me’,” he said.

“But I do have a certain amount of sympathy. Some landlords have been told that Tenancy Services staff are being told to earn their salary in fines, so there’s a lot of pressure now. There’ll be people ringing up after the first of July saying ‘oops, I forgot’, but there is no way that there’s enough capacity in the industry.”

Cammock said insulators were being treated as an ambulance at the bottom of the cliff, and his company had been forced to turn away property managers with large contracts because of the pressure and a lack of manpower.

“I can’t ethically commit to hiring people for a short term basis and letting them go,” he said. “Some people are just getting people on for the bubble and will cut them loose, but that’s not right.”

As well as bringing on more labourers, Cammock said his company had employed staff whose sole responsibility was quoting residential work, but they too had been overwhelmed.

“My phone has never rung this much, people are calling up with three or four houses to do by July 1st and it’s not possible – I just turned someone away this morning.”

Housing New Zealand was also under pressure as their standards specify polyester insulation rather than glass wool, which is much more common. Manufacturers in New Zealand can’t keep up with the last minute rush on supply, Cammock said, but landlords had been given plenty of notice.

“At the end of the day landlords have known for three or four years now, and the vast majority of them have left it until the last minute. We’ve tried to promote ourselves to property managers saying the deadline is coming up, but a huge chunk have left it. There’s a reasonable amount that are refusing outright – even though it could potentially only cost them $1500.”

And, because the enforcement fine will be paid out to tenants, some insulators said they’d heard of tenants making site access difficult in the hopes they could drag installation past the deadline.  

Next month’s deadline is the first of several extending out to July, 2024, by which time all rentals in New Zealand must meet the government’s Healthy Homes Standards. The standards cover everything from insulation through to heating, ventilation and drainage. From July 2021, all private landlords must ensure their properties comply with the legislation within 90 days of any new tenancy. 

But with an industry at total capacity, for landlords looking to insulate it might be too little, too late.


*Don Rowe is a staff writer at The SpinoffThis article first ran on The Spinoff and is used here with permission.

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Landlords won't care. Anyone who gets fine $4000 will just pass that on to the tenants, put the rent up.

How long after they get fined to they get to rectify the issue before getting another fine?

Not sure, and they probably don't care. I've been told any and all costs incurred by the Landlords from this "draconian" legislation will be passed on to the tenants.

Ah yes, I also like stories about hobbits, leprechauns and other fantastical beasts.

So tenant dobs in LL for no insulation and gets a $4k windfall, LL increases rent. Tenant goes back to TT for relief from retaliatory rent increase. LL gets pinged again. Next?

If there was a regulatory requirement for all rentals to have solid platinum sinks do you think we would see an increase in rents?

The Ministry of Housing and Urban Development did a Regulatory Impact Statement. They seem to think that not all costs will be passed on due to various factors, but they do say "There have been recent increases in national median rent, this could be in part due to landlords anticipating the introduction of changes when considering how to set rents." "Landlords may recover these costs from tenants through rents where supply and demand conditions allow them to do so." MBIE say "Private landlords may seek to increase rents to cover the cost of compliance in the short run."

We had one site where we found an exception described by the tenancy tribunal. The insulation can be delayed until major construction is carried out in that case. This is fortunate as the tenants would have been kicked out to comply with the deadline, when the tenants want to stay.

Any responsible landlords should have served notice to tenants where the rental will not comply by the due date. I don't think this was the intended consequence but it would be the correct, and unfortunate, method of compliance.

Well, I guess that might work if they can afford to pay the mortgage on the rental from their own income until they can get the property insulated and then re-let. If they can't.. well, things could get awkward fast.

Alternative #2.. landlords get their hands dirty and crawl round under their own houses to do the work.

No one wants to lose income but if not complying costs large fines then something has to give.

Most small scale landlords should be prepared to put in the work themselves, but if they've left it to the last minute...

I have no doubt that the ministry will back down, if not on the date, then the "fines" will be a slap on the hand with a wet bus ticket for anybody that isn't clearly taking the mickey.

PS, they are about a month and half too late to give notice now.

Insulation can be delayed only if a building consent or resource consent has been applied for. 12 months max. It is intended for where the property is to be demolished for a new build.

If landlords have left everything to the last minute they only have themselves to blame.

There are a few areas that could cause contention.

As an example. We had a rental insulated about 4 years ago, when they brought out the grants, but the floor couldn't be done due to not enough space to get in - according to the insulation company.

If the tenant dobs us in for not having it done, an inspector could come out and say there is enough room to get under in their opinion, and decide to fine us.

I would hope that common sense would prevail in this case, however, still a whole lot of time and money to sort - when it could have been done once. I don't have a lot of faith in the insulation installing companies - on par with meth decontamination companies I'd say.

If less than 400mm crawl space it is considered inaccessible and you do not need to insulate it.

The insulation company should have given you a certificate stating that the area is inaccessible. This will be enough to get you off the hook as, after all, you are not an expert on insulation, they are and you did your best.

honestly, pretty absurd for landlords not to have seen this squeeze coming. it's been obvious for ages.

agree there can be unintended consequences, though. we were looking at a property with a let minor dwelling where we would have been happy to allow the tenant to stay for a while, but it's not worth the hassle to worry about compliance in the short term.

This part of the article....

“At the end of the day landlords have known for three or four years now, and the vast majority of them have left it until the last minute. We’ve tried to promote ourselves to property managers saying the deadline is coming up, but a huge chunk have left it. There’s a reasonable amount that are refusing outright – even though it could potentially only cost them $1500.”

If a landlord has not bothered to get off their arse and get sorted, they only have themselves to blame and should get fined. Saying they are not prepared is not an excuse.

One annoying thing about this whole business is that you may think your house is insulated because it has pink batts in the ceiling but, no, the insulation has settled over the years and now they are considered too thin. I think they should have been a bit more forgiving of houses that actually are insulated.

The worst landlords in the country for lack of insulation is the NZ Government.
They haven’t extra time to have there stock insulated but air can guarantee that they won’t all comply by due date.
Yes responsible landlords will have had the insulation up to code prior to the date, but doesn’t seem reasonable this lot can tell
Landlords how they have to run heir business when theirs is so flawed?
Why is it that rental property has to comply and owner occupiers don’t?
What has it got to do with the government?

Same reason that car manufacturers are required to install seatbelts etc...

Due to work load we recently decided to change our successful AirBNB to a rental. We have had 72 groups stay in winter, a very common comment is how warm it was. We had the ceiling insulation redone by "professionals" a few years ago. I had to redo most of it as they did such a crap job. Booked the floor to be done months ago but the guy has not shown up and is not answering calls. I am doing it myself to meet the deadline. Access is very difficult, it is very unpleasant, dusty, dirty and dangerous in places. 15 hours later I'm half done, it is just as well I'm not paying by the hour. In my opinion it is complete overkill - we have lived in the house happily for decades without it. I'm guessing the power bill will drop by less than $30 a year, the house will be no warmer.