Healthy Homes Standards – Implications for Landlords

New and existing legislation for healthy homes

Being a good topic to generate lots of debate and therefore sell newspapers (or in today’s day and age generate more clicks as “clickbait”), you’ve probably seen lots in the news about tenants taking their landlords to the Tenancy Tribunal for lack of insulation after the insulation requirements for private rentals became compulsory on 1 July 2019 (following 2016 legislation).  This of course has been a long time coming, and if you use a Property Manager for your rental property you likely would have been required to provide a certificate of insulation or consent to an independent certifier coming to inspect and certify that it is installed.

Now, to build on the Government’s goal for warmer and drier homes for tenants, the Healthy Homes Standards legislation (Residential Tenancies (Healthy Homes Standards) Regulations 2019) has become law on 1 July 2019.

Section 45 of the Residential Tenancies Act 1986 (“the RTA”), which covers Landlord’s Responsibilities and the consequences of failing to adhere to these, has also been amended “(1) The Landlord shall – (bb) comply with the healthy homes standards”.

As stated above, it has been compulsory to have ceiling and underfloor insulation in all rental homes since 1 July 2019.  There are limited exemptions, for example if access to the area to install is impractical or unsafe.  However, most landlords if they fail to insulate commit “an unlawful act” under the RTA (see section 45(1A)).  The penalty for failing to meet obligations in respect of the healthy homes standards (and the existing insulation requirement) is an award to the tenant of a sum up to $4,000.

The new healthy homes standards build on the current insulation legislation.  The deadline for this is 1 July 2021 (all private tenancies – new or renewed after that date must comply within 90 days of the renewal or new tenancy) with complete compliance by private rentals by 1 July 2024.

There are also additional healthy homes standards to comply with, including: heating, ventilation, moisture ingress and drainage, and draught stopping.  These all must be complied with by 1 July 2021 (all private tenancies – new or renewed after that date must comply within 90 days of the renewal or new tenancy), with complete compliance by private rentals by 1 July 2024:

  • The heating standards require a fixed heater that can directly heat the main living room to at least 18 degrees celsius (not an open fire or portable gas heater);
  • The ventilation standards require that:
    • all habitable rooms in a rental property must have at least one window, door or skylight which opens to the outside and can be fixed in the open position. This must be of a size that’s at least 5% of the floor area of that room;
    • All kitchens and bathrooms must have an extractor fan vented to the outside.
  • The moisture ingress and drainage standard requires that rental properties:
    • must have an efficient drainage for the removal of storm water, surface water and ground water, including an appropriate outfall. This must include gutters, downpipes and drains for the removal of water from the roof.
    • Must have a ground moisture barrier such as a polythene sheet or something equivalent if the property has an enclosed subfloor.
  • The draught stopping standard requires that the:
    • premises cannot have unreasonable gaps or holes in walls, ceilings, windows, skylights, floors and doors which cause noticeable draughts. The age and condition of the house cannot be a defence.
    • If the home has an open fireplace (which is not allowed as a source of heating under the heating standards above) it must be closed off or the chimney blocked to prevent draughts in and out of the property through the fireplace. The exception to this rule is if the tenant requests to make the fireplace available for use and the landlord agrees.  In this case it must be in good working order.  It would be prudent for this agreement to be recorded in writing.

Recent Tribunal decisions 

Some recent decisions of the Tenancy Tribunal concerning the former insulation requirement (that still applies to all rentals commenced prior to 1 July 2019) and retaliatory notices given by landlords (ending the tenancy to avoid liability) are discussed below.  We have included just a small selection of the many, many claims brought on this matter since 1 July 2019:

Price v Johnstone [2019] NZTT New Plymouth 4200657, 4205035:

Exemplary damages of $1,000 were awarded to the tenant for lack of insulation.  In that case the landlords had allegedly installed insulation a few years earlier but hadn’t recently checked the ceiling space, and photos showed very little insulation.  The tenant had a child in poor health and the house was found to be cold.  The adjudicator stated “The landlord acted intentionally in choosing not to check the existing insulation and choosing not to meet the current requirements for insulation over the whole house. It is in tenants’ interests that they live in warm, dry homes. There is clear public interest that landlords are aware of law changes and insulate their rental properties. I allow exemplary damages in the amount of $1000.

Regan v Parnham [2019] NZTT Christchurch 4200738:

Exemplary damages of $600 were awarded to the tenant for deliberate failure by the landlord to install insulation by the due date of 1 July 2019.  In that case, the landlord had rectified the problem and installed insulation by 9 August 2019.  The adjudicator found “The landlord had ample time to install the insulation and he was aware of the need to do [it]. To his credit, when the tenant complained about it, he acted promptly to install it. It was installed approximately 6 weeks late… Taking all relevant things into account, an award of $600 exemplary damages is appropriate for the landlord’s failure to comply with the regulations.

G & E Enterprises Limited v O’Connell [2019] NZTT Christchurch 4203621, 4207375:

Apart from the interesting factual scenario which included a silver bar being paid as a bond (and no exemplary damages were awarded despite it being technically illegal), in this case the Tribunal also awarded exemplary damages of $600 for delay by the landlord in installing underfloor insulation (installed by late August).  It was found there was ceiling insulation installed on time.  Again the landlord was chastened by the Tribunal, “The landlord should have acted sooner to install the underfloor insulation. The dysfunctionality of the landlord company is no excuse.

Bennet v Willans [2019] NZTT Christchurch 4199661:

In an award addressing a number of inadequacies in the property provided by the landlord including lack of inappropriate insulation, the Tribunal awarded compensation of $3,000 and exemplary damages of $2,000 to the tenants for breach of section 45 of the Act by the landlord.  The landlord had allegedly offered the property to the tenants at a reduced rent to take into account the problems with the property, but this was held to be no excuse.  The Tribunal held that even if it was true the parties agreed to a reduced rent, “The minimum standards are there for a very good reason and the Residential Tenancies Act 1986 does not permit tenants to waive their rights (s11)”.  The adjudicator also stated “This [is] a relatively bad case. The landlord appears to have little appreciation of her obligations as landlord. The premises were obviously seriously defective, and she was content to let them in that condition. The tenants have suffered because of that.

As can be seen from the above cases, the Tenancy Tribunal does not have much sympathy for landlords who have let the 1 July 2019 deadline pass and then have frantically insulated after realising their potential exposure to liability.  The tribunal has even less sympathy for landlords who simply haven’t insulated or haven’t recently confirmed it’s there (being able to show this by certificate or photos).

Recommendations

If your tenants have been renting your property since prior to 1 July 2019 and you haven’t yet installed ceiling and underfloor insulation, you are at risk of being liable should your tenant apply to the Tribunal.  We recommend you get on to insulating as a matter of priority.  If the tenancy commenced after 1 July 2019, you must have insulated within 90 days of the tenancy commencing.

Ending the tenancy to avoid potential liability for lack of insulation means you could get hit with an Order that you have served a “retaliatory notice” under section 54 and can be liable for an award to the tenant of $4,000, should they apply to the Tribunal.

In order to not get caught out like many landlords have with the insulation requirement for the healthy homes standards, we recommend that you audit your rental stock now and put plans in place for the budgeting of and the gradual installation of the required measures in order to comply with all of the healthy homes standards by 1 July 2021.  This will avoid having to rush to do this on a new tenancy or renewal at that time.  It will also have the added benefit of increasing the market value rental of your home and keep your tenants happy and wanting to stay, which is always a good thing!

This article was written by Camille Bell and does not constitute legal advice.  You should obtain specific advice before you make any decisions or take any action based upon information contained therein.