Written by Rebecca Clark - Solicitor (Property)
The Healthy Homes Guarantee Act (No 2) 2017 (HHGA) passed into law in December 2017, after initially being unsuccessfully introduced in 2013. The purpose of the bill was to ensure every rental property in New Zealand meets minimum standards of housing and insulation. Andrew Little, under the Labour Party, introduced a second version of the bill, which received opposition from both National and ACT. They argued that in the practical sense this would do nothing to improve the living standards it seeks to address.
The facts speak for themselves about conditions many New Zealanders live in. At the time of the 2013 Census, over 450,000 New Zealanders lived in rental properties. Although at present there are no specific guidelines for what constitutes a warm and healthy home, the University of Otago found that the average indoor temperature in New Zealand homes is 2-5 degrees lower than what the World Health Organisation recommends.
At present, landlords have an obligation under s 45(1) of the Residential Tenancies Act 1986 (RTA). The HHGA proposes to amend the RTA to ensure every rental home in New Zealand meets the minimum requirements of heating and insulation to achieve warm, dry homes.
Current responsibilities include:
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Ensuring tenants receive the house in a reasonable state of cleanliness;
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Ensuring the property is in a reasonable state of repair taking the age and character into consideration;
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Complying with all requirements in respect of buildings, health and safety under any enactment so far as they apply to the property;
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Ensuring that the property has reticulated water supply and if not, provide adequate means for storage and collection;
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Compensating the tenant for any reasonable expenses incurred for repairing the property so long as the state of disrepair did not result from a breach of the tenancy agreement; and
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Taking all reasonable steps to ensure none of the landlord’s other tenants interferes with the reasonable peace, comfort or privacy of the tenant in use of the premises.
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The HGGA inserts the responsibility that the landlord “must comply with the standards of heating and insulation” under s 132A. Failure to do so will be considered an “unlawful act”.
From 1 July 2019, any new tenancies must be properly insulated or contain an adequate heating source. From 1 July 2024, all tenancies must meet this new threshold. The MBIE (Ministry of Business, Innovation and Employment) have 6 months to decide on and publish these standards. Standards must describe what constitutes adequate methods of heating, methods of insulation, indoor temperatures, ventilation, draught stopping, and drainage.
Grants of up to $2,000 will be available to eligible landlords to assist with these upgrades however no information has been released regarding eligibility criteria. The government estimates that it will cost between $3,000 and $5,000 if a landlord has to insulate from scratch and have a heat pump installed.
Important things to take away and provide to your landlord clients:
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The provisions of the Act will need to be complied with from July 2024. For savvy landlords, it may pay to start creating a contingency fund to cover any costs that the government subsidy won’t provide for.
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For potential investors, it may be worth considering the quality of a property before entering any new agreement and factoring in the cost of complying with the new regulations.