Landlords and Insulation
Insulation requirements for residential Landlords including owners of farm houses used for employee accommodation are changing. There are a number of changes you need to be aware of if you are a landlord and there is a real risk of fines if you do not comply with these new rules.
All new Tenancy Agreements must include an Insulation Statement setting out the level of insulation in the walls (where known) ceiling and underfloor including where the insulation is and what type and condition the insulation is in.
An Insulation Statement template can be accessed at https://www.tenancy.govt.nz/assets/Forms-templates/insulation-statement.pdf
Ceiling and underfloor insulation must be completed by 1 July 2019 for all residential rentals including farm housing, where insulation is reasonably practicable to install. Wall insulation is not compulsory.
Failure to sufficiently insulate by 1 July 2019 may incur a Landlord with a $4,000.00 fine. Tenants, which include farm staff, can file a claim against a Landlord at the Tenancy Tribunal if the insulation has not been completed
These obligations include owners of farm houses used for employee accommodation. However, for dairy farm owners, with a sharemilker in place, who have a signed Contract which includes staff housing, the onus is on the sharemilker to comply with the current Landlord insulation obligations unless the Contract states that the onus is on the farm owner to supply accurate insulation statements and meet the insulation requirements.
The insulation must be installed safely and meet the standards set out in the Insulation Regulations, which is rated by how well the insulation resists heat flow, measured by the R-value. R-values differ depending on which part of the country the property is located and if the home is timber framed or a masonry home. More information on R values can be found at;
Obviously the cost to install insulation varies depending on the size, shape and location of the home – however, the average cost of a 96m2 home is estimated at approximately $3,400.00 plus GST.
Some local Councils “may” assist by allowing homeowners to add the insulation cost to their rates, repayable over a (approximate) 9 year period so check with your local Council if needed
There are exceptions
Properties designed or constructed in such a manner where it is either physically not possible or where major renovations are required, to enable insulation are exempt.
For example, where an experienced professional insulation installer cannot access the location to install the insulation without;
- Removing cladding or lining, or
- Carrying out substantial building work, or
- Causing substantial damage to the property, or
- Creating health or safety risks to people, such risks being greater than the normal level of risk when installing insulation.
However the Landlord is expected to provide access where it can be achieved by carrying out minor work and if changes are made to an exempt property that then allows insulation, then it must be installed as soon as reasonably practicable.
If a Landlord is in any doubt over whether insulation can be installed, an experienced professional insulation installer should be consulted and, if needed, a builder. If the experienced professional says insulating some areas is not reasonably practicable or not possible, the Landlord must ask for written confirmation of the reasons to include in tenancy agreements.
It is not enough for a Landlord to simply claim that ‘insulation is not reasonably practicable’.
Other exceptions include:
- Where the property is to be demolished or substantially rebuilt within 12 months of the start of a tenancy (if requested, a Landlord must provide evidence of having applied for the resource/building consent for redevelopment/building work)
- Where a property is purchased from and immediately rented back to the former owner-occupier a 12 month exemption will apply from the date of purchase
It is anticipated that there are currently more rental homes that need to be insulated than can be completed by the deadline of 1 July 2019 so if you have a residential rental property that does not meet the new insulation criteria, time is of the essence to ensure you comply with the new insulation rules.
We are aware that some Banks may be offering interest free loans for funding the costs of meeting insulation obligations so it might be worthwhile contacting your Bank.
For more detailed information go to https://www.tenancy.govt.nz/assets/Uploads/Insulation-requirements.pdf