Subfloor insulation in rentals a costly mistake

A requirement to install subfloor insulation in rental properties should go and owners who have installed it under threat should be compensated, Tenancies War spokesman Mike Butler said today.

Insulation features in “healthy homes” regulations that Housing and Urban Development Minister Phil Twyford is expected to impose next month.

Under existing law, New Zealand’s 262,000 owners of rental property are required to install both ceiling and underfloor insulation by July 1 or face a penalty of $4000 payable to any person who reports non-compliance.[1],

The cost of installing R 1.3 subfloor insulation as required by the Residential Tenancies (Smoke Alarms and Insulation) Regulations 2016 for most of the North Island was $881.64 for a 77 square metre dwelling.[2]

The requirement for subfloor insulation is ridiculous because at best it reduces heat loss by only 9 percent which means the cost of installing it substantially outweighs any benefits, [3] Mr Butler said.

Ceiling insulation reduces heat loss by 35 percent but the difference between ceiling and subfloor insulation was not considered in the cost benefit analysis done by the New Zealand Institute of Economic Research for the Government, he said.

When asked why, an NZIER spokesman said that the Ministry of Business Innovation and Employment asked them to leave it out of the analysis, Mr Butler said.[4]

Requiring subfloor insulation in rental properties was a policy blunder perpetrated by the former National-led Government that should be remedied, he said.

The Minister has rectified another costly failure by the former Government by amending a methamphetamine contamination threshold that was 24 times lower than the lowest level that anyone could plausibly have a health risk, Mr Butler said.

Mr Twyford could include in the “healthy homes” standards a similar correction by dropping the requirement for subfloor insulation, he said.[5]

Owners who have installed subfloor insulation under threat based on faulty advice require compensation, Mr Butler said.

A repeal of the subfloor insulation regulation could save the Government millions of dollars in work not required for any state houses that may not have subfloor insulation, 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.

[1] Schedule 1A Amounts for unlawful acts, Residential Tenancies Act 1986, at http://www.legislation.govt.nz/act/public/1986/0120/latest/whole.html?search=qs_act%40bill%40regulation%40deemedreg_residential+tenancies+act_resel_25_h&p=1#DLM3285790

 

[2] Qualifying ceiling insulation. See http://www.legislation.govt.nz/regulation/public/2016/0128/16.0/DLM6856254.html

[3] How Insulation Works, Level. http://www.level.org.nz/passive-design/insulation/how-insulation-works/

[4] The proposed Healthy Homes Regulations: An assessment, Ian Harrison, p17. http://www.tailrisk.co.nz/documentlist

[5] Meth, evidence, govt failure. https://www.nzcpr.com/meth-evidence-govt-failure/

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.