Home insulation costs set to raise rents

FEELING THE COLD: Heat loss seen from a house without insulation. PHOTOS/FILE

Those in the Wairarapa property industry are welcoming a Government announcement that all rental properties must be fully insulated within four years, but say rents may rise as landlords try to recoup costs.

Housing Minister Nick Smith last week announced plans to strengthen residential tenancy laws, including requirements for landlords to provide smoke alarms and insulation, and to declare the standard of insulation on tenancy agreements.

The requirement would apply from July 2016 for Government-subsidised social housing, and from July 2019 for all other rentals including boarding houses. There would be some exceptions, such as in houses where it was physically impossible to retrofit insulation.

Smoke alarms would be compulsory from July next year.

Trust House owns about 500 rental properties and chief executive Allan Pollard said the new rules were "absolutely" a good idea.

"I think it's fantastic. It's a good step forward and anything we can do with the resources available to improve the lives of our tenants gets our vote."

About 89 per cent of the properties owned by the trust were already insulated and smoke alarms and batteries were provided free.

The other Trust House rentals without insulation were possibly uninsulated due to the constraints of the property, Mr Pollard said.

The regulations might mean that rents could rise, he said.

"It has the potential to increase rents. Private landlords are wanting to maintain a return on their investment ... if you get a 5 per cent return you want to retain it so if you have to charge extra, you will."

Trust House would not be increasing its rents to cover insulation costs, having already spent about $300,000 over the last five to 10 years insulating many of its properties.

Property Brokers manages 577 houses in Wairarapa and manager Guy Mordaunt said he welcomed the news, although the majority of the properties it looked after were already insulated.

"Ultimately, it's a great thing. Better quality housing is a great thing - what effect it will have on the 'mom and pop' landlords I don't know."

Rent in Masterton could go up by about 5 per cent or $20 to $30 per week as landlords sought to cover the cost of insulation, Mr Mordaunt said.

"It's not cheap to insulate a house, there's got to be a rental increase and it certainly will affect some areas more than others.

"The whole concept of a rental warrant of fitness is good but it comes at a cost and ... it has a big cost if the Government doesn't provide a subsidy."

However if all rentals were insulated it might be difficult for those landlords who put up rents to compete for tenants, he said.

The manager of Carter Court, which is soon to take over Carterton's housing for the elderly, Chris Clarke, said the news fitted in with the organisation's plans to improve the formerly council-owned units.

"The warmer and healthier and drier we can get homes the better."

He was unsure how many of the flats had insulation but said some "definitely" required it.

It was unclear at this stage what the costs would be to insulate all the units but they would be doing the math soon, he said.

According to Government figures 180,000 New Zealand homes require insulation and 120,000 homes need smoke alarms.

- additional reporting by Isaac Davison, NZME