Why the new standards are not the answer

The final version of the Government’s new Healthy Homes minimum standards came out last week. Stop the War on Tenancies spokesman Mike Butler tells us what he thinks about them…

Standards for rental property are necessary. The Residential Tenancies Act includes standards that have existed since the Home Improvement Regulations of 1947.

Since we are now in 2019, and since the open fireplaces that were OK in 1947 have been banned, there is a case for an update. But any update should be evidence-based.

Unfortunately, the standards created by Housing Minister Phil Twyford are dominated by woolly, nanny state thinking.

For example, let’s take the new 2008 insulation standard of R 2.9 in ceilings, or a thickness of 120mm, that has to be met in two years.

Ceiling insulation makes sense because as hot air rises, 35% of heat may be lost through an uninsulated ceiling.

The evidence that the Ministry of Business Innovation and Employment has is that the optimum for ceilings is the 1978 standard of R 1.9.

But anything over that has diminishing effectiveness which amounts to a waste of money.

The former government stuck to the 1978 standard of R 1.9 in ceilings in standards that must be met by July 1 this year.

The minister’s new requirement to top-up insulation to meet the 2008 standard of R 2.9 even though there is diminishing effectiveness ignores the evidence and is a waste of money.

This requirement is a kick in the guts for owners who have been insulating for years to the R1.9 standard.

Subfloor insulation also makes little sense because only 10% of heat is lost through the floors and many floors are already insulated by carpet. For this we can blame the former government.

The requirement to provide a “fixed heater” (which is taken as code for a heat pump) makes little sense when all sorts of heaters are readily available from less than $20 and people have been able to keep themselves warm since time immemorial.

Whether a heater is fixed or portable makes no difference to heat output.

A large heater is not necessary because many dwellings are not large, and the area to heat is a living room that may be less than 10 square metres. A big heat pump would be overkill.

The presence of an electric heater does not mean it will be used because electricity is expensive and doubled in price from 2004 to 2014.

The Government, which is a major electricity supplier and of which the minister is a part, says nothing about the high cost of electricity.

Heaters must be able to raise the temperature to 18C, which is described as healthy according to a World Health Organisation recommendation.

But a closer look at WHO documents reveals that “no conclusions could be reached on the average indoor ambient temperature below which the health of the general population may be considered endangered”.

The Minister justified the standards when they were announced in February by saying “6000 children are admitted each year for ‘housing-sensitive hospitalisations”. This is not backed by evidence.

Answers to questions under the Official Information Act revealed that just one of 244,152 children had a condition exacerbated by housing in the 2015/16 year. See https://www.health.govt.nz/nz-health-statistics/health-statistics-and-data-sets/hospital-event-data-and-stats?page=2.

The Minister’s full claim was that “6000 children are admitted each year for ‘housing-sensitive hospitalisations’, and that these children have been found to be nearly four times more likely to be re-hospitalised and 10 times more likely to die in the following 10 years”.

This was lifted from page 41 of A stocktake on New Zealand Housing (2018). Since this is a Government publication commissioned by the Minister who wrote the foreword it gives the appearance that the Minister was quoting himself.

That assertion was made with no supporting data other than a footnote titled “Risk of rehospitalisation and death for vulnerable New Zealand children”. That paper identifies crowding as the housing factor and said that death was rare. (See https://www.ncbi.nlm.nih.gov/pubmed/28735258).

The standards we now have are designed to combat a claimed prevalence of cold, damp housing in New Zealand.

But only 2.7% of tenants surveyed complained about cold, damp housing, according to a Building Research Association of New Zealand report. See https://www.branz.co.nz/cms_show_download.php?id=606738ff7cb47451e094ad80f39cc912fa18f7a8.

The standards will have limited effectiveness. Insulation top-ups merely ensure that the costs of heating are marginally reduced. A fixed heater does not ensure that it is used. Ventilation by turning on extractors to remove steam from kitchens and bathroom could be achieved by opening a window.

The standards will have no effect on hospitalisations resulting from disease-transmission in crowded houses, respiratory diseases resulting from indoor smoking and unflued portable gas heaters, or infections resulting from poor hygiene.

This means that a fully compliant but crowded dwelling would continue to drive high rates of close-contact infectious diseases such as pneumonia, meningococcal disease and tuberculosis.

This evaluation of the new standards is likely to go down like a cup of cold sick for rental property owners.

A rule of thumb for home improvements comes down to costs and benefits and whether an owner-occupier would freely choose to spend the amount required.

For instance, with solar heating, homeowners who know the cost of panels and installation and can calculate how long it would take to get the money back and therefore can make a rational decision on whether to proceed.

Instead, in nanny state fashion, the Minister has set aside rational decision-making for rental property, and taken it upon himself to decide what he thinks is best for tenants and forced owners to comply.

The “healthy homes” requirements all cost money. For rental property owners, this money will have to either come from savings or a loan and be recouped by way of rent increases. Owners have a choice – do the work or sell.

A number of owners I know have had a gutsful and have sold, reducing the supply of rentals at a time that New Zealand is facing a housing crisis.

By driving rental property owners out of the market, the Minister is doing precisely the opposite of what is required to encourage an increase in rental property supply.

The Minister appears to be living in denial that the costs incurred by his standards will increase rents and reduce the supply of rental property without making any difference to the health of those living in crowded dwellings.

*Mike Butler has owned and managed rental properties for 27 years and currently has 60 tenants in 12 buildings.

This article was first published in Landlords magazine at https://www.landlords.co.nz/article/976514916/comment-why-the-new-standards-are-not-the-answer

What evidence-based ‘healthy home’ standards look like

Evidence-based rental property standards would require ceiling insulation to the 1978 standard, no subfloor insulation, and nothing more, Tenancies War spokesman Mike Butler said today.

Advice to the Government obtained under the Official Information Act (See http://tenancieswar.nz/healthy-homes-legislation/)  shows no support for the claim that heat pumps, extra insulation, extractor fans, draught-proofing, and moisture-proofing, which soon may be imposed under the Healthy Homes Guarantee Act, would keep 10,800 children out of hospital each year.

The World Health Organisation never recommended a minimum indoor temperature, as the discussion document claimed, and the Building Research Association of New Zealand found that only 2.7 percent of renters thought their dwelling was cold and damp, which is hardly a crisis, Mr Butler said. (See The proposed healthy homes regulations: an assessment http://www.tailrisk.co.nz/documentlist)

We already have standards for rental property and if Housing and Urban Development Minister Phil Twyford followed advice, the standards he would confirm under regulation would be thus:

  • Heating: A tenant should be able to use whatever he or she chooses to plug in so long as it is safe. Both fixed and portable heaters can deliver sufficient warmth. Last year, Housing New Zealand found that a number of tenants would not use 15,000 fixed heaters recently installed because they were not what they were used to. (see  http://tenancieswar.nz/2018/10/09/complaints-show-problem-with-heaters-in-rentals/?fbclid=IwAR3uFj9j1V95oRmjDl1Q_TbFpWNXJxXMfpFtJO1aWezlB-JxOxipfoG2PxE ) The high price of electricity is the greatest barrier to poor people turning on the heater, not the presence or absence of a heater. Wood-burners are useful for those who prefer a fire.
  • Insulation: Ceiling insulation to the 1978 standard of R1.9 for most of the North Island should be the standard because it has the greatest impact and anything over that has diminishing cost-effectiveness. Underfloor insulation is a waste of money because it hardly reduces heat loss. Owners forced to install it should be compensated.
  • Ventilation: Windows that may be opened is a basic standard of ventilation and have been required since 1947 under Home Improvement Regulations of that year. There is no solid evidence that mould is a serious issue in rental properties.
  • Draught-proofing: Residents will protect themselves from draughts when they need to and any serious issues may be remedied through discussion with the owner. Requiring draught-stopping tape in gaps greater than 3mm in 588,700 rental properties is absurd.
  • Moisture-proofing: No evidence has been offered to prove all rental properties suffer from rising damp. The evidence is that 2.7 percent are perceived as cold and damp. Dampness problems are remedied by discussion with the owner or through the Tenancy Tribunal.

The outrageous $4000 dob-in-your landlord incentive imposed by the previous government should be dropped, he said.

The attempt to blame housing-related hospitalisations of 10,800 children annually on the condition of 588,700 rental properties while ignoring 1.1 million owner-occupied properties and not accounting for overcrowding is deceitful, he said.

Up to $7000 of extra spending per property may be required if every rental property required a heat pump, extra insulation, extractor fans, as well as the suggested draught-proofing and moisture proofing and this would have little benefit, Mr Butler said. (See http://tenancieswar.nz/2018/11/)

The money for extra compliance can only come by way of a rent increase from the tenant who is in effect being forced into buying extra appliances and building material without necessarily wanting it, he said.

A more-effective way ahead should be driven by owners and tenants in which any issues with heating, insulation, ventilation, draught and moisture proofing could be sorted out by agreement, he said.

Stop the War on Tenancies is a group that since last October has been highlighting the evidence that successive governments have ignored while creating rental property policy.

Cherished ‘damp rental’ beliefs rubbished

Cherished ‘damp rental’ beliefs rubbished

Fewer than 3 percent of tenants find their homes cold and damp, the World Health Organisation did not recommend a healthy temperature, and client-friendly research helped understate the costs of heating and insulation proposals for rental property, according to a discussion document released today.

Iconoclastic economist Ian Harrison of Tailrisk Economics has taken aim at the cherished beliefs of Housing Minister Phil Twyford in a discussion document titled The proposed Healthy Homes Regulations: An Assessment.

Twyford is finalising a series of standards for New Zealand’s 588,700 rental properties on heating, insulation, ventilation, moisture and draught-proofing under the so-called Healthy Homes Guarantee Act that was passed last December.

As justification, the Minister points to assertions that many New Zealand houses, not just rental houses, are “cold and damp” and that this has health implications.

A key touch point is that our homes don’t meet the World Health Organisation recommendation that indoor spaces be heated to at least 18C.

The Healthy Homes Standards discussion document put out for public consultation in September has six pages of references which give the appearance of sound and thorough research. But for anyone who goes to the papers and checks the claims, it quickly becomes obvious that:

  1. Only 2.7 percent of tenants thought that their rental was cold and damp, according to a survey by the Building Research Association of New Zealand in 2017, and of that percentage it was not clear what proportion was due to inadequate use of heating and a failure to ventilate by tenants.
  2. The World Health Organisation did not recommend a minimum indoor temperature of 18C. What they did say was that no conclusions could be reached on the average indoor ambient temperature below which the health of the general population may be considered endangered.
  3. Research evidence shows that the common New Zealand practice of lightly heating bedrooms does not present a health risk.

The bulk of the paper was devoted to a cost benefit analysis done for the Government by the New Zealand Institute of Economic Research, that Harrison described as “client friendly”.

Key “unhelpful” documents were sometimes ignored, costs were systematically understated, and unrealistic methodologies were adopted that overstated the net benefits, Harrison wrote.

Harrison redid the cost benefit analysis by including the unhelpful documents while correcting costs and methodologies to find that a heat pump in every living room would come at a capital cost of $457-million bringing a net loss of $500-million.

Insulation top-ups would cost $410-million bring a loss of $269-million, ventilation would cost around $200 million with very limited benefits, moisture proofing would cost around $300-million with no material benefit, and draught-proofing would cost around $300-million, again with limited benefits.

The NZIER’s assessment of the cost of insulation was based on outdated prices and only considered ceiling insulation, which by excluding subfloor costs, increased its benefit.

When questioned on why underfloor insulation was not included, NZIER said that they were directed by the Ministry of Business, Innovation and Employment not to consider it.

The value of underfloor insulation is marginal because only 10 percent of heat is lost through the floor while 40 percent is lost through the ceiling.

The evidence shows that “healthy homes guarantee” slogan is nothing more than political spin, which is very bad news for all rental property owners who may be forced to spend around $7000 per dwelling on unnecessary upgrades.

Since an insulation top-up costs the same as insulating from scratch, all those “good” rental property owners who have installed insulation since whenever have probably wasted their money because they may have to re-do it.

The proposed Healthy Homes Regulations: An Assessment may be read at http://www.tailrisk.co.nz/documentlist.

Ian Harrison, who has a BCA Hons from Victoria University Wellington, and a Master of Public Policy SAIS Johns Hopkins, has worked with the Reserve Bank of New Zealand, the World Bank, the International Monetary Fund, and the Bank for International Settlements.

Owners not consulted directly on tenancy reforms

Owners not consulted directly on tenancy reforms

Why were the owners of New Zealand’s 588,700 rental properties not consulted on draconian proposals on tenancy law and extra housing standards when Tenancy Services holds the contact details of every owner who has lodged a bond, Tenancies War spokesman Mike Butler said today.

The submission period for proposed changes to tenancy law and extra standards for rental property ended yesterday.

Tenancy law proposals would prevent owners from ending tenancies contractually, ban fixed-term tenancies, give tenants the right to modify a property, allow tenants to keep pets as of right, and enable Government officials to enter boarding houses at any time.

Extra standards for rental property may require fixed heating in every room, additional insulation beyond current requirements, extractor fans in kitchens and bathrooms, installation of polythene sheets under floors, and draught-stopping tape around windows and doors.

“The Government has the ability to notify owners directly but this time notification was limited to a few posts circulated around social media”, Mr Butler said.

“Is the office of Housing Minister Phil Twyford dysfunctional to the extent that contacting owners was never considered, or was the failure-to-notify a plot to minimise owner submissions and encourage feedback from tenants? he said.

Anyone who spent the several hours required to complete the online questionnaire about proposed tenancy reforms would see that the proposals would make an already biased-against-owners Residential Tenancies Act even more steeply biased against owners, Mr Butler said.

“Some questions were so poorly phrased that a rational response was not possible”, he said.

Anyone who completed the online questionnaire about the proposed extra standards would realise that the Housing Minister is trying to solve a problem that largely does not exist, Mr Butler said.

The questions skirt around the major issue, the elephant in the room, which is a shortage of affordable housing, both own-your-own and rental, he said.

The group Stop the War on Tenancies aims to empower both owners and tenants in the face of ongoing Government ineptitude with housing.