From 1 July 2021 the Residential Tenancies (Healthy Homes Standards) Regulations 2019 come into effect. The regulations require that all rental properties comply with the Healthy Homes Standards (HHS) within 90 days of the commencement of any new tenancy or any renewed tenancy. All tenancies must meet this standard by 1 July 2024.
The purpose of the HHS is to ensure that renters will achieve warmer, drier homes which will help to reduce mould, dampness and associated health conditions.
However, any investment property owner also need to be immediately aware that from 1 July 2019 all rental properties must meet the ceiling and under-floor insulation standards where the insulation is reasonably practicable to install. If insulation cannot be installed then the Landlord must disclose this in the rental agreement.
These new insulation standards will vary according to a dwelling’s construction and location. The estimated costs for ceiling and under-floor insulation is likely to be anywhere between $4,000.00 to $6,000.00 for the average dwelling.
Smoke alarms must also be installed in every rental property by 1 July 2019. The MBIE Tenancy Services have advised that no extensions to landlords are to be granted as these requirements have been in the pipeline since 2016. Any Landlord who failed to comply with the regulations will be liable for a fine of up to $4,000 per offence.
For example, by 1 July 2021 landlords must ensure that their rental properties meet the below standards:
- Heating – there must be fixed heating devices which are capable of achieving a minimum temperature of at least 18°C in the living room only.
- Insulation – the minimum level of ceiling and underfloor insulation must meet the 2008 Building Code or (for ceiling insulation) have a minimum thickness of 120mm.
- Ventilation – this includes openable windows in the living room, dining room, kitchen and bedrooms, as well as an appropriately sized extractor fan in rooms with a bath, shower or indoor cooktop.
- Moisture ingress and drainage – there must be efficient drainage, guttering and downpipes. If a property has an enclosed subfloor then it must have a ground moisture barrier if this can be practicably installed.
- Draught stopping – any unnecessary gaps or holes in ceilings, walls, windows, floors or doors must be stopped if they are causing noticeable drafts. Any chimney or fireplace that is not in use must be blocked.
Furthermore, a landlord has to keep records of how they are complying with the HHS (i.e. code compliance certificates and receipt or invoices showing work has been done). These records must be able to be provided to the Tenancies Tribunal or Tenancy Compliance and Investigation Team as well as include compliance information in the Tenancy Agreement.
For some landlords who are yet to bring their rental dwellings up to these standards these requirements are likely to become a financial drain. It is possible that rents will rise accordingly, and could lead to more investment properties being sold on the market for more “flush” investors to buy.
Any prospective landlords who are keen to invest in a nest egg as soon as possible are recommended to undertake careful due diligence before purchasing a property. The investor will want to understand the cost of complying with the regulations and the HHS if they intend on renting out immediately.
If your clients require any clarification on the standards, or would like assisting carrying out due diligence on their next investment purchase, then please direct them to contact Cavell Leitch’s Property Team.