Insulation of Rentals in NZ

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Less than four months to insulate From 1 July 2019 ceiling and underfloor insulation will be compulsory in all rental homes across New Zealand and REINZ has been busy over the past few months reminding property managers and landlords that they now have less than four months to insulate their rental properties or they could face a fine of up to $4,000 from the Ministry of Business, Innovation and Employment (MBIE).

MBIE has warned that it will be proactively checking up on landlords to ensure their rental properties meet the requirements under the Residential Tenancies Act (RTA) by the deadline and that any landlords who still don’t comply after paying the penalty, may face further action according to MBIE.

ZONE 1 & 2 Ceiling R2.9 Underfloor R1.3

ZONE 3 Ceiling R3.3 Underfloor R1.3

Map of climate zone Zone 1 Zone 2 Zone 3

The insulation requirements were announced under changes made to the RTA back in 2016, and last year MBIE was already warning landlords that it would be increasing its enforcement capabilities and that it ‘made no apologies for their approach’ so landlords need to act now if they want to avoid a fine of up to $4,000.

Landlords now need to assess their current insulation, check whether insulation can be installed and then install or top up their insulation as required.

Insulation is rated by how well it resists heat flow and is measured by what is known as the R-value. Essentially, the higher the R-value, the better the insulation is.

If ceiling and underfloor insulation was installed in a client’s rental property before July 2016, they may not need to upgrade the insulation, provided it’s in reasonable condition (e.g. no mould, dampness or gaps in the insulation).

Minimum R Values The minimum R values for timber-framed homes in the ceiling is R 1.9 and for underfloor it’s R 0.9. For masonry homes the corresponding minimum R values are R 1.5 and R 0.9. There are also minimum R values for different areas of the country; for Zones 1 & 2 the minimum ceiling value is 2.9 and underfloor value is 1.3 and for Zone 3 the respective minimum values are 3.3 and 1.3.

MBIE has outlined that where there are multiple layers of insulation and all layers

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The Real Estate Institute of New Zealand

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are in reasonable condition, then their R-values may be combined.

If any part of the existing insulation is not in reasonable condition, then the landlord must replace it with insulation that meets the new standard.

Cost and timing As a rough guide, MBIE has suggested that the average cost for a professional installer to install both ceiling and floor insulation is about $3,400 +GST for a 96m2 property.

This would obviously increase if the property is larger.

Insulation can be installed in most homes in a day minimising disruption to tenants.

Waiting times for assessment, and for scheduling the work, will vary depending on where you are in the country, and the current demand.

However, one of the main issues is that there are still a significant number of rental properties around the country that need insulation and the Insulation Association of New Zealand (IAONZ) has already stated that it is gravely concerned about the number of rental properties still to be insulated.

Late in 2018, IAONZ surveyed its members to find out how many landlords were insulating their rental properties and the organisation felt the results were ‘alarming’.

The survey revealed that IAONZ member companies had limited landlord demand and therefore insulated only 10,000 out of 180,000 rental properties estimated by MBIE as needing insulation to comply with the new tenancy regulations before the July 2019 deadline.

IAONZ President Stu Henwood says “IAONZ members have assessed over 36,000 rental properties and almost 60% of assessments

didn’t comply with the new Residential Tenancy Act guidelines. This leaves a mountain of about 170,000 uninsulated rental houses to be insulated in less than two years. At its peak, the insulation industry was insulating about 50,000 – 60,000 houses a year so there’s a serious risk many landlords will miss out and risk penalties when the deadline for the new tenancy regulations kicks in.”

Henwood reiterates, “Landlords can install insulation themselves, but it is essential insulation is inserted properly to be effective and compliant with the installation standard NZS 4246. Aside from a reduction in thermal performance, poorly installed insulation also has the potential to create a fire hazard, particularly around light fittings.”

Warm, dry homes While there is an obvious cost to landlords to having to insulate their property, REINZ has welcomed the insulation requirements as they will help to improve New Zealand’s housing stock and also improve the health and wellbeing of our rental population.

While REINZ has been making a strong effort to communicate with its members who are property managers, as there is no regulation and no governing body for property managers there is a high chance that a number of property managers around the country will not have ensured that their landlords meeting the requirements by 1 July. If the industry was regulated, this could reduce the chance of the legislation not being adhered to by rogue property managers.

Norwell also points out that one other point that many landlords haven’t picked up on is that they then must ensure that all new tenancy agreements must include a separately signed insulation statement covering what insulation the home has, where it is, and what type.

Landlords can visit the Insulation Association of New Zealand, the Energy Efficiency Conservation Authority or MBIE’s Tenancy Services website for helpful information in relation to the insulation requirement.

WITH HOME OWNERSHIP AT ITS LOWEST LEVEL IN 60 YEARS, MORE AND MORE KIWIS ARE RENTING, SO IT’S ESSENTIAL WE PROTECT THE HEALTH OF THOSE RENTING TO ENSURE WE PREVENT RESPIRATORY AND SKIN INFECTIONS THAT CAN BE CAUSED BY INADEQUATE HOUSING. BINDI NORWELL, CEO, REINZ

AUTUMN 2019

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