Wellington Property Investors' Association

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19-06-2015

Minimum standards for rentals are coming

Standards for rental properties, both state owned and private, have very much been in the news over recent weeks.  This is due to reports of the deaths of two State House occupants last year.  There had been a large degree of agreement that these deaths should have been prevented but much less agreement about how to achieve standards which would be acceptable for the tenants and affordable by the owners?

The living conditions of some people in New Zealand are currently sub- standard. In the case of two year old Emma-Lita, who died of a blood clot in August 2014, Coroner Brandt Shortland said the Housing New Zealand house where she lived in Otara could not be ruled out as a contributing factor in her illness and subsequent death. Mr Tovo, who also died last year, was suffering from heart and lung problems as well as battling pneumonia and doctors made several pleas to move him because of the cold and damp state of the house. Neither of these families could be moved because of pressure of the HNZ waiting list.  In fact One News reported that there were at the time 500 families in need of immediate transfer from a list of 1,200 waiting for homes more suitable for their requirements.

This does not mean that more could not have been done for these two families and for similar cases existing now and in the future. Housing New Zealand is said to be spending $300 million on upgrading houses. It also ran a Warrant of Fitness trial on 500 houses last year, checking that they were insulated, were safe and had working smoke alarms and that they had basic amenities. A report of this trial is due to be released next month.

Opposition parties and some commentators have been calling for a more extensive Warrant of Fitness to be made mandatory for all rental properties. Labour MP Phil Twyford is urging support of his Healthy Homes Bill which did not get past the first reading stage earlier this year.  However, the Minister of Housing has said that prohibiting the rental of non-insulated housing would take 100,000 rentals out of the market at a time when the demand is outstripping supply.

Unfortunately a rental property WOF would not have helped Emma-Lita or her family. Their problem was not having sufficient funds to heat their home.

Professor Howden-Chapman from Otago University has done extensive research on the link between the quality of housing and health. Commenting on the number of children who are hospitalised because their health has been affected by their living conditions, she said New Zealand needed to consider creating a policy around fuel poverty given that many families could not support the cost of heating.

"That's sadly a growing problem ... we know that in the last census, 9 percent of households didn't use any heating at all, and basically there is no part of New Zealand where you can keep warm and dry in your house if you don't have some form of heating," she said.

Read more of her comments here

If anything, an extensive rental property WOF could make the situation worse for tenants, like Emma-Lita's family, and particularly for those who rent in the private sector. Someone has to pay for the cost of inspections and this is likely to fall on the tenants. Higher rental prices would make it even harder for families to heat their homes.

Rather than an expensive and wide reaching WOF, we need to address the real problems causing some of our children to become and remain sick. The NZ Property Investors’ Federation believes that the families of children with health issues potentially caused by living in a cold damp house should be provided with electricity vouchers during the winter months to assist them heating their homes. In a recent case, a HNZ tenant, who had no heating while waiting for the repair of his chimney, was given a heater and $100 towards electricity costs until the repair could be undertaken.

Listen to more of Andrew King’s comments about why financial assistance with paying for electricity for some low income families here

Russell Wills, the Children’s Commissioner, and Professor Philippa Howden-Chapman have both been approached by the NZPIF to support the NZPIF’s proposal to lobby Government to ensure electricity vouchers are available for families who have sick children and who also cannot afford to turn on the heaters.  There has been a positive response from both the Children’s Commissioner and Professor Howden-Chapman and they are planning to meet with NZPIF representatives in Wellington on August 4.

Government should focus on insulation and heating rather than a WOF, which among other things checks the size of kitchen benches and whether the property has a toilet and hot and cold water. One aspect which could be reviewed is the business category to which retrofitting of an existing house with insulation is assigned by Inland Revenue.

The retrofitting of an existing house with insulation is deemed by Inland Revenue to be a capital expenditure and is therefore not tax deductible. The NZPIF is aware that farmers who undertake riparian planting of watercourses for environmental benefit are able to claim the associated cost as a tax deductible expense. The NZPIF suggests that given the proven health benefits from insulated homes, which saves the government $5 in health costs for every dollar invested, rental property owners, who retrofit their properties with insulation, should be entitled to claim the cost as a tax deductible expense in a similar manner to farmers carrying out riparian planting.

The Government is considering the introduction of mandatory minimum standards next month.  These are likely to include insulation and smoke alarms. If it is going to be a requirement for rental properties to be insulated and the installation of insulation is necessary to continue renting out these properties, then the NZPIF believes that that the cost should be tax deductible. It would be good to have Government clarify this aspect.

Hear more here http://tvnz.co.nz/breakfast-news/landlords-call-insulation-tax-deductions-video-6334224

Einstein said 'If I had an hour to solve a problem I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions.' This is definitely a situation where we need to put more time into thinking about the problem before leaping to a solution.

 

 

 

 

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