Housing Minister Phil Twyford says taxpayers will be forced to fork out $200 million to upgrade Housing New Zealand's homes to meet new rental homes standards.
Mr Twyford announced a raft of new measures on Sunday, arguing that New Zealand's cold and damp housing is responsible for around 1600 premature deaths every winter.
Rental homes will need to provide adequate living room heating, meet tougher insulation standards and have an extractor fan in the kitchen and bathroom.
But improving rental homes to the new requirements will hurt both landlords and the Government.
"Housing New Zealand is going to be spending more than $200 million upgrading its properties, as it should," Mr Twyford says.
"It's very important that the Government gets its own house in order. They've got a significant amount of work to do."
Housing New Zealand currently owns and is responsible for 68,000 rental properties. It and community housing providers have to meet the standards by July 1, 2023.
But the not-for-profit Green Building Council says this timeframe "is not quite good enough".
"Housing New Zealand homes won't fall under these standards for another four years - that's too late," says chief executive Andrew Eagles.
"New Zealand has waited way too long for moves like the one today, and there's no time to waste to improve the sorry state of all our rental homes."
Mr Twyford says the deadline for Housing NZ homes is due to both the large number of houses, and the number which would need to be brought up to the compliance level.
"It's partly to do with the market, in terms of the number of installers and providers who can do all the work," he says.
"Housing New Zealand has got 68,000 properties that it's responsible for so it's going to take a while to phase that in. They can plan it over that period of time."