Hopefully pragmatism will replace Twyford’s agendas

Tenants and owners may hope that some pressure may have gone now that Phil Twyford is no longer Housing Minister, paying the price for the political embarrassment that KiwiBuild became, Tenancies War spokesman Mike Butler said today.

His tinkering with rental property standards and tenancy law helped hike rents and drove a number to sell, creating a new housing crisis, Mr Butler said.

Insulation standards based on optimum costs and benefits had already been set by the previous government and Mr Twyford’s requirement for additional insulation would incur extra costs for little extra benefit, he said.

Requiring a fixed heater makes little sense when there is a wide range of affordable heaters that tenants already use to suit their needs, he said.

Installing extractor fans, which are costly, difficult to install, or have an opening window in the way, is in many cases a waste of money. Properties may be ventilated by opening windows.

The $200 million Mr Twyford allocated to the charity Housing First to house 1000 people over four years at a cost of $961 per person per week, relies on leasing properties from the private sector that have been difficult to find, Mr Butler said.

Mr Twyford’s somewhat desperate “build-to-rent” proposal would require substantial Government financial support and guarantees to get off the ground, just like the failed KiwiBuild programme, and would mean high-density, large apartment blocks that most likely would end up as ghettos, he said.

Whether the new Housing Minister, Megan Woods, is pragmatic or agenda-based remains to be seen, Mr Butler said.

The decider will be whether she proceeds with tinkering with the Residential Tenancies Act that would end the contractual rights of owners to end tenancies, and remove the ability to sell with vacant possession, as Housing New Zealand requires when buying properties from private owners, he said.

Stop the War on Tenancies is a group that since last October has been highlighting the errors made by successive governments while creating rental property policy.

See CHB 86-year-old moves out https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12238724

See Housing shortage first hurdle, https://i.stuff.co.nz/business/property/105735200/housing-shortage-first-hurdle-as-housing-first-moves-to-marlborough

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.

Extra rental standards to cost $7000 per house

Extra rental standards to cost $7000 per house

Papers obtained last week under the Official Information Act show that up to $7000 of extra spending may be required for each of the 588,700 rental properties in New Zealand and that this will have little benefit, Tenancies War spokesman Mike Butler said today.

Extra rental property standards on insulation, heating, ventilation, moisture protection, draught-proofing and drainage, under the Healthy Homes Guarantee Act, which were sent out for public consultation last month, are being finalised now.

Advice to the Minister of Housing and Urban Development, Phil Twyford, showed benefits only from insulation and draught-proofing, with heating, extractor fans, and moisture-proofing mainly incurring costs without benefits:

  • Insulation of up to 70,000 properties to 2001 standard of R1.9 in most of the North Island expected a benefit of $64 a year per property.
  • Heat pumps in living rooms achieving a temperature of 18C in 180,000 properties showed a cost of $33 a year. No benefit was cited.
  • Extractor fans in kitchens and bathrooms incurred a cost of $48 per property. No benefit was shown.
  • A cost of $48 per property was cited for moisture-proofing and drainage work in 192,000 properties. No benefit was cited.
  • Draught-proofing tape around windows and doors was recommended with a claimed benefit of $49 per property if 30 percent of rental stock required it.

The total cost of around $7000 comprises insulation $2452 (an insulation top-up costs roughly the same as first-time insulation), a heat pump $3000, two extractor fans $1000, a ground moisture barrier $700, and draught-proofing (costs unclear).

A compliance deadline of sometime between July 1, 2019, and 2024 was recommended, as were exemplary damages of $4000 for non-compliance.

It will be over to rental property owners either to recoup the $7000 by adding around $14 a week to rent for 10 years, or pay for it without recouping it.

The Minister was warned that these costs would be added to rent for those owners who chose not to sell up. Grants to cover costs were recommended, according to the OIA release.

The Minister was advised that the biggest gain achieving 80 percent heat-loss reduction was insulating to the 1978 standard, which was R1.9. Anything over that had little extra gain.

It appears from the papers that the total number of uninsulated rental properties in New Zealand is unknown.

Looking past all the rhetoric in this debate, it appears that all that actually needs to be done, if reducing heat loss in winter is a worthy aim, is to find out what properties are uninsulated and take steps to remedy this, Mr Butler said.

An offer from the Government of free insulation subject to a visit by a Government official to confirm that the property is uninsulated could achieve that, Mr Butler said.

Advice to the Minister is that cold is an issue for the very young and the very old. Any health issues therefore could be addressed by a targeted approach ensuring that the vulnerable have and can afford adequate heating, he said.

A fixed heat pump is not the only way to lift the temperature to 18C or 20C. There is a range of options including wood-burners, flued gas heaters, and efficient portable electric heaters that we have been using for decades without difficulty, Mr Butler said.

If this extra $7000 of spending is imposed, much of which has been shown to have a cost without a benefit, in the current environment of strong demand for rental property, owners can charge extra so they most probably will, and this will go on top of current rent increases, Mr Butler said.

This is part of the Government’s policy of “making life better for renters” but the Minister may actually be making life more expensive for renters, 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.

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