On Healthy Homes

02 September 2016

IT’S ON THE HOUSE

Insights and advice for property investors & home owners.

On Healthy Homes

The Healthy Homes Guarantee Bill, which recently passed to the select committee stage in Parliament, outlines new minimum legal requirements for a ‘healthy home’. If passed into law, it will potentially have wide-reaching consequences for landlords and tenants. Determining how the changes will affect you and whether to support or oppose the bill may seem daunting. This blog will lay out the facts and give an idea of what we at Quinovic think.

What is the Healthy Homes Guarantee Bill?

The bill outlines new minimum standards of heating, insulation and ventilation in New Zealand rental properties, in order to reduce cold and damp conditions. If passed, the changes must be implemented fully by 2019. The fundamental idea is to raise the overall standard of New Zealand homes and protect tenants’ health. This idea has gained momentum with the public recently due to lots of reported cases in which poor quality homes have possibly contributed to illness and even death of tenants. The bill hasn't been passed into law yet, but is part way through the process, having reached the select committee stage.

What will it mean for landlords and tenants?

As the bill is primarily focussed on the health of tenants, it will likely have the biggest effect on them day-to-day, and they will experience an improvement in living standards and comfort. In particular in colder areas of the country and in winter, the rates of damp/cold-related illnesses are likely to decline. Heating bills should also see a significant reduction. This could really benefit those in lower income households - those who are most likely to be affected by poor quality housing in the first place.

For landlords whose properties don't match the required standards, it will mean mandatory renovations to bring them up to scratch. However in the long-term, having a better maintained property is likely to allow you to continue seeing a return on your investment for longer.

What are some of the issues being raised and are they valid?

Some people could be worried that the renovations will cost a lot of money, and that these costs will be passed on to tenants. This would put particular strain on lower income households. The truth is that there will be renovation costs, and in some cases such as older properties, there will be higher costs than in others.

Finding a way to fund the improvements may worry some, but it is always possible to spread out the payment of these renovations over time. For example, good value council loans are often available for such repairs. In warmer areas of the country, the costs will be lower too, as the regulations on things like the thickness of insulation take into account the temperature of the area. Also, in the long-term, the improvement of homes should significantly increase their value, which will certainly offset much of the initial outlay. Furthermore, good quality insulation and ventilation will drastically reduce the frequency of repairs. Many landlords know just how expensive it can be to repair damage caused by endemic damp, and over time the renovations could save them a lot of money.

In terms of the cost being passed on to tenants, they don't need to worry as rent cannot increase outside the market rate, so they won't be hit with drastic jumps in living costs. Also, the reduced heating bills will leave extra money for other things.

Our thoughts on the bill

At Quinovic, we can see the potentially long-lasting benefits of the bill to landlords and tenants alike. Tenants will directly benefit from improved living conditions and comfort, as well as lower bills. Landlords will benefit from an increase in property value and improved relations with tenants. The country as a whole will also feel the benefit. Ann Easthope, co-principal of Quinovic Napier, says ‘At Quinovic we look at the big picture. This bill will mean less pressure on the health system, and will benefit national education and employment due to fewer sick days being taken’.

Overall, despite the shock some may feel when potentially facing renovation costs, the bill will bring about much-needed improvements to our country's housing. The initial costs shouldn't be astronomically high for most properties and will be offset anyway in the long-term by increased property values, as well as fewer repairs.

 

Find out more about the proposed Healthy Homes Guarantee Bill.

 

If you have any questions or want advice about the healthy homes bill, talk to us.

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