Tenants will pay for insulation - investors
Most landlords aren't rich and many will sell their rentals rather than pay to have insulation installed, according to the head of the NZ Property Investors Federation.
From today, landlords have to provide working smoke alarms in their rentals. Social housing providers have to provide insulation, but private landlords have until July 2019 to get it installed.
"I think they are good changes," Andrew King told Paul Henry on Friday.
"Basically it's to improve the living conditions for tenants, but it's also to save the Government a lot of money on health costs."
They're good because he doesn't expect landlords to take the financial hit, instead passing on the costs of getting insulation installed to tenants.
"People need to realise it costs a lot of money to insulate a property. There's no tax deduction for it, and that cost is going to have to be achieved through increasing rents."
The IRD clarified earlier this year that despite soon being compulsory, insulation was a capital expense, and therefore not tax-deductible - unless it was an improvement to existing insulation in order to meet new building standards.
The Government estimates the average cost of retrofitting insulation will be about $3300.
Mr King says it's likely for many property investors the cost and hassle of putting in insulation will drive them out of the market. Though this might sound like good news for first-home buyers, Mr King says it's bad news for those wanting to rent.
"We need more rental properties at the moment - Auckland has a shortage of properties for homeowners, but it also has a shortage of properties for tenants as well. There's a lot of overcrowding going on in south Auckland, west Auckland. We need more people to get into rental properties."
New tenancy agreements need to state what insulation the property currently has, so tenants know whether it needs to be upgraded by 2019 - Mr King calls this a "fishhook" that may catch out landlords who haven't been paying attention to changes in the law.
"You've got to know what you're doing... the costs of getting it wrong are increasing."
And despite what tenants might think, Mr King insists most landlords are "not rich people", and only have one or two rentals to their name.
"The vast majority of people are just trying to do something for their retirement to help them in their old age."