New Insulation Rules: How To Be Compliant And Avoid RORT

August 1, 2017

Insulation will be compulsory in rental properties from July 2019. Subsidies on offer are leading to price hikes and huge variances in quotes. In this post we examine what landlords need to do to be compliant and what to look out for when dealing with installers.

 

What Has Changed And Who It Affects

Changes to The Residential Tenancies Act 1986 came into effect on 1 July 2016. The changes mean that come 1 July 2019, it will be compulsory for all rental properties to have underfloor and ceiling insulation (wall insulation is not compulsory) that meets specific thermal resistance or R-values. This applies to any residential rentals covered by the Residential Tenancies Act including rental homes and boarding houses, as well as sleep-outs depending on design. Failure to comply can lead to a penalty up to $5,000. For more on the consequences of failing to comply, see our winter newsletter.

 

How Rentals With No Insulation or Insulation Installed After 1 July 2016 are Affected

Properties that don’t have ceiling and underfloor insulation, or have had insulation installed since 1 July 2016, need to meet the minimum new and topped up levels of insulation by 1 July 2019. The insulation needs to meet the minimum R-values outlined in the table below. If it does not, it must be upgraded by 1 July 2019. Any replacement of insulation not in reasonable condition or top-up insulation must also meet these standards.

 

ZONE 1 AND 2

ZONE 3

Ceiling R 2.9

Ceiling R 3.3

Underfloor R 1.3

Underfloor R 1.3

How Rentals With Insulation Installed Before 1 July 2016 are Affected

 Underfloor and ceiling insulation installed prior to 1 July 2016 will not need upgrading if it is in reasonable condition, and meets the R-values outlined below. If any part of the insulation is not in reasonable condition it must be replaced.

TIMBER-FRAMED MINIMUM

MASONRY MINIMUM

Ceiling R 1.9

Ceiling R 1.5

Underfloor R 0.9

Underfloor R 0.9

It’s also worth mentioning that any installation or mending of foil insulation is banned and can land the guilty party a penalty of up to $200,000. This means that foil insulation needs to be removed (after turning off the mains power) prior to installation of suitable insulation. A cost that needs to be considered.

 

Insulation Statements Are Now Compulsory

In addition to the physical insulation requirements, the July 2016 act revision now requires all tenancy agreements to include an insulation statement to help tenants make a more informed decision. Failure to do so can lead to a fine of up to $500. The statement needs to disclose the following:

 

  • Whether there is insulation in the rental home
  • Where insulation is installed
  • The type of insulation installed, and
  • What condition the insulation is in

 

More information about insulation statements can be found here, and an example can be found here.

 

What To Look Out For When Dealing With An Installer

Landlords can qualify for subsidies as part of the Warm Up New Zealand: Healthy Homes programme if:

  • Their tenant has a Community Services Card
  • Their tenant has health conditions that are worsened by cold, damp housing
  • The rental house was built before the year 2000

Sounds good but some installers using the subsidy are providing quotes that are actually higher than other companies who aren’t. Here are our top tips to avoid being stung by dishonest installers using the scheme to hike prices and cash in.

  1. Get multiple quotes from both installers who are using the subsidy and installers who are not. This helps identify whether the subsidy is helping the landlord out, or if it’s going straight into the installer’s pocket.
  2. If the quote is for multiple houses, this saves the installer time and money over offering individual quotes – ask for a discount that reflects this.
  3. Ask installers to price match other quotes you have or to throw in something extra to help them win your business.
  4. Ask lots of questions. If you’re getting varying quotes and one company says you require X when another says you require Y, and another says Z, chances are at least one party is fibbing, so call them on it and see how they react.

 

Why It Will Pay To Take Action Sooner Rather Than Later

Because this legislation is compulsory and there is a deadline, price manipulation and difficulty in getting quotes and installation bookings will only increase as we approach 1 July 2019. Smart landlords will take action sooner rather than later and use the advice above to protect themselves from RORT.

As a rough guide, the average cost of paying a professional installer to put in both ceiling and floor insulation is approximately $3,400 + GST for a 96m2 property. To ensure you avoid unlawful acts and penalties, contact us First Avenue Property for help in working through what’s required.

 

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