Why the Rental Warrant of Fitness will not work in its current format
UK style rating is the way forward for healthy houses
First of all, let me start by stating that this is not an article beating up the people who have designed and implemented the Rental Warrant of Fitness. The intentions of these people are good and they are thinking of the most vulnerable of citizens within New Zealand. I also genuinely applaud the Wellington City Council for trying to get this off the ground. The current Mayor Justin Lester campaigned in the mayoral elections stating that if he was elected he would implement the Rental Warrant of Fitness. He is as good as his word and he should be commended.
However, the current guidelines for the Rental Warrant of Fitness are seriously flawed and in my opinion, are bordering on 'Nanny State'. This was a criticism of the previous Labour Government with policies around new standards for light bulbs and restrictions around hot showers.
The Rental Warrant of Fitness (WoF) is the brainchild of the University of Otago and in particular Prof. Philippa Howden-Chapman and Dr. Julie Bennett who have spent nearly two decades researching and designing the WoF. The WoF was launched by Wellington City Council in late August with much fanfare however the scheme recently hit the headlines for the wrong reasons when it was revealed that only two landlords had taken up the voluntary scheme and one of them had complained about it in the media.
The criticism came from landlord Joseph Williams who stated that his tidy clean and relatively new rental property in Johnsonville had failed, even though it passed a basic council inspection in 2011. He also went on to state that the report was poorly written and full of spelling errors however these are minor issues that should be easy to rectify. Currently, the Sustainability Trust carry out the WoF inspections and charge $250.
The WoF inspection has 29 criteria and 63 questions that an inspector will assess. The assessment covers insulation, heating, ventilation, structural stability, sanitation and hazard identification. Where the main issues lie is that it is a simple Pass or Fail with a six-month window to get the property up to scratch if it fails the first time around. The idea is that landlords can promote the property as WoF passed to prospective tenants when advertising it.
In principle, it seems like a good idea but when you take a closer look it is seriously flawed.
I first came across the WoF when I was involved in the REINZ Property Management committee about 4 years ago. Nick Smith was the National Party Housing Minister and he sent out a proposal seeking feedback on the WoF. As a committee, we were asked to critique it and at the time I felt it went too far, measuring cupboards, having window strips on and having security stays on windows more than 2 metres off the ground. My opinion hasn't changed. In the end, the National Party threw it out stating it would add more cost onto landlords and subsequently it would increase rents.
I use my own house as an example. We recently renovated our own home and have gone to huge lengths to ensure the property is warm and dry. We have done the following work.
- Insulation installed in the ceiling, most of the walls and underfloor
- Installed double glazing windows throughout the property
- Had central heating installed throughout the property
- Installed a Showerdome
- Installed a ventilation system
- Had a polythene sheet installed on the ground under the property
You would struggle to find a warmer, healthier home in Wellington. However, our house would fail the WoF because we do not have window strips and we have no intention of installing them.
There are other factors seriously wrong with the WoF as well. Let's take into account issues around mould. The WoF guidelines state The house must be reasonably free of visible mould, having no more in total area of mould than an A4 sheet of paper. That is a very generic statement. There is a big difference in size between a 1 bedroom unit and a 5 bedroom mansion yet they are both measured on the same criteria. Also, what if the tenant is causing the issues around mould? This is a constant grey area that is often debated. It does not seem fair that a landlord may fail a WoF because of the way in which the tenant may live in the property.
What we believe is a better model is to replicate the UK style Energy Performance Certification (EPC) on all properties, making it compulsory for all residential housing to show how the property performs in terms of its energy efficiency and its environmental impact through Carbon emissions. If homeowners and landlords do not display the EPC when a property is on the market, then they may be fined. We prefer this scheme as it gives a property a rating, similar to that of any household appliances rather than a simple pass or fail.
The EPC is valid for a period of ten years compared to the WoF which is valid only for three, saving the landlord and subsequently the tenant money, as any increased costs are likely to be passed on to the tenant. The cost of an EPC is anywhere between $120 and $240 which is similar to New Zealand but as it is valid for ten years rather than three means there are significant savings to be made.
If every house has a rating, this will make landlords and homeowners more incentivised to ensure that their properties perform more efficiently providing warmer, drier homes for prospective tenants. It will also lead to long-term tenants reducing vacancy periods.
This could become the framework around the standards for the upcoming Healthy Homes Guarantee Bill, ensuring that the standards set are transparent, compulsory and easy to follow.
In all my years involved in Property Management, I would have been into thousands of properties up and down New Zealand. I have seen tenants living in conditions not befitting of a country as advanced as ours and our housing stock has to improve. I for one, applaud initiatives to raise the standards for tenants across the country. The nation as a whole benefit with less sickness, less time off work and less of a strain on our healthcare system. However, this format will not work.
The new Labour lead coalition also has to take into account whether or not there will be enough skilled people available to do all the work. They have already announced they are going to build 100,000 affordable houses in ten years. That is one challenge they've committed to but who is going to do the work on the rest of the countries housing stock?
Maybe increasing immigration is the answer? Oh, I forgot, NZ First is in the coalition. Winston Peters would never stand for that!