Landlords just cannot catch a break at the moment. First, the notice periods for termination of leases increases and the right to terminate a tenancy without reason is removed. Next, the government brings in changes to the interest deductibility rules for owners of residential rentals increasing the costs of owning the property. Now, landlords are required to comply with ‘Healthy Homes Standards’ or risk significant fines.
Well, I guess it’s not all bad given the interest rates are so low, demand for residential rentals in the major centres has never been higher and compliance with the Health Homes Standards will probably increase the value of the property long-term. Still, the immediate costs of compliance with the standards may be daunting – what does it even mean? What does the Landlord have to do? And what are the risks if one does not comply?
Firstly, what does it mean?
All new private rentals commencing after 1 July 2021 have 90 days to meet the five Healthy Homes Standards. Briefly, those five standards are:
- Heating Standard – the property must have at least one fixed heater capable of directly heating the main living area. The government tenancy website has a heating-tool calculator for landlords to check that their heating is compliant.
- Insulation Standard – the requirement to have insulation in rental properties is not new. For the past two years ceiling and underfloor insulation has been compulsory ‘where it is reasonably practicable to install’. If Landlords have not done so now then it will behove them to do so.
- Ventilation Standard – every habitable room in the rental property needs either a window, a skylight or a door that opens to the outdoors. Every kitchen and bathroom needs to have an extractor fan installed in it.
- Moisture Ingress and Drainage Standard – there are two elements to this standard. Firstly the property must have a drainage system that efficiently drains storm, surface and ground water to an appropriate outfall, as well as a drainage system for the removal of water from the roof. Secondly, if your property is lucky enough to have a basement it must have an adequate ground moisture barrier.
- Draught Stopping Standard – this standard requires open fireplaces to be closed off of chimneys blocked to prevent draughts into the premises. This does not apply where the Tenant requests the use of the fireplace and the Landlord consents to that use, provided the fireplace is in good working order. Landlords are also required to plug any unreasonable gaps in the property that are causing a draught.
Compliance will become mandatory for all private rentals by 1 July 2024. This means that even those Landlords that have kept the same tenancy going from pre-1 July 2021, whether it be the same tenants or it has continued by ‘assignment’, will need to ensure compliance.
Secondly, what does the Landlord have to do?
The Landlord will need to provide a compliance statement with the residential tenancy agreement for new tenancies. Tenancy Services helpfully provides a template version of this compliance statement for free use by Landlords.
We recommend that if you are a Landlord entering into a new tenancy you print off the compliance statement and walk around the premises checking whether there are any items that need remediation or whether the property is up to standard.
There are a few exceptions to each of the standards. It would pay to check these and take advice if any of these could apply to your tenancy.
And finally, what if the Landlord does not want to?
Provision of the Landlord’s compliance with the Healthy Homes Standards is important. A Landlord that fails to comply with the requirement to provide healthy homes information may be liable for an infringement fine of $1,000. If the Landlord has 6 or more tenancies or is the Landlord of a boarding house tenancy then they may be liable for a fine of $2,000.
Compliance with the requirements of the Healthy Homes Standards is more important. If a Landlord fails to comply with the Healthy Homes Standards they may be liable for exemplary damages up to $7,200.
It is possible that any decision against a Landlord could also contain a direction to comply with the Healthy Homes Standards within a set period or otherwise be liable for a further penalty or more damages.
So what now?
If you are a Landlord that is about to enter into a new tenancy agreement and are unsure about your obligations, get in touch with us and we would be happy to provide you with the appropriate advice.
If this article has raised any questions for you, we'd love to hear from you. Please contact Michael O'Flaherty, Associate on michael.oflaherty@gibsonsheat.com.
Disclaimer: The information contained here is of a general nature and should be used as a guide only. Any reference to law is to New Zealand law and legislation. We recommend before acting on it, you consult your accountant or tax adviser
