Photo: Getty Images
Photo: Getty Images

BusinessJune 13, 2019

Two weeks from the rental deadline, the insulation industry is at total capacity

Photo: Getty Images
Photo: Getty Images

Landlords face a $4000 fine if their properties are uninsulated on July 1 – but insulation companies say time’s run out and if they haven’t done it by now, bad luck. Don Rowe reports.

Two weeks out from the Residential Tenancies Act insulation deadline the industry has reached total capacity, with businesses warning there is “absolutely no way” New Zealand’s housing stock will be insulated on time.

Anne Fletcher, owner-operator of Auckland Insulation, said her company was facing unprecedented demand compounded by manufacturer delays with a workload exceeding anything she’d seen in almost 30 years in the industry.

“Some manufacturers have really had a huge issue in April and May, we were putting orders in then that we didn’t get until June,” she said. “We’re facing a massive workload. Everyone is trying really hard, and the main thing that annoys me is when property managers with 40 houses ring me and want to send a list of 40 properties through. Where have you been for the last four years?

“I’ve been doing this 28 years and seen a lot of companies come and go, and we’ve never seen anything like this. We’ve doubled our numbers of staff and everything, but the problem is doing the quoting and assessing – I’ve got 28 years’ experience I can’t inject into a new employee, because there are so many different factors to allow for. Not every house is a square box.”

The regulations, passed by the National government in 2016, require landlords to install underfloor and overhead insulation in rentals unless it was “either physically impossible to insulate, or would require major renovations to do so” by July 1 on penalty of a $4000 fine.

A 2018 MBIE report estimated there were between 126,000 and 220,000 houses left to insulate as of December last year, with industry capacity for 50,000 to 60,000 properties each year. Now, six months later, businesses across the country are almost incapacitated by the workload, and MBIE says there are no extensions available under the RTA as it would be “unfair to those landlords who have acted in time to do the right thing”.

“The requirement to insulate was widely publicised in 2016 when the changes to the RTA were made, and Tenancy Services has worked hard to ensure landlords are aware of their responsibilities by running an extensive information and education campaign,” said Peter Hackshaw, acting national manager, Tenancy Compliance and Investigations.

“Landlords have had ample time and information to get the required work done and failing to comply is not only unlawful, it also exposes tenants to potential harm by not having a home that is warm and dry enough during the winter months.”

Researchers from the University of Otago estimate poor housing costs the country more than $145 million annually in preventable illness and injury. In 2015 Otara toddler Emma-Lita Bourne’s death was attributed in part to the damp, cold state house in which she lived. Last year Dr Lance O’Sullivan reported visiting freezing homes with water running down the internal walls, where children were contracting third-world illnesses.

Anne Fletcher said her firm was receiving too many inquiries to respond to on a daily basis, and both her landline and cellphone were almost unusable.

“We’re getting easily in excess of 30 emails coming in a day, and the phones are going off constantly – they’re calling right now even as I talk to you. But it’s good to have the legislation in place and especially for investors overseas, by all means ping them, but don’t sting mum and dad landlords for $4000 – we all have to have patience.”

Fletcher also expressed doubts Tenancy Services would have capacity to prosecute the thousands of landlords who won’t make the deadline.

Graham Cammock, owner-operator of Hamilton’s Premier Insulation, said the industry had been warning of a bottleneck for more than a year.

“We’re overcapacity. We’ve been bringing on more staff for the last six months and a lot of people have left it too late. As an industry we were signalling that 12 months ago. It was a case of ‘it’s not going to happen to me’,” he said.

“But I do have a certain amount of sympathy. Some landlords have been told that Tenancy Services staff are being told to earn their salary in fines, so there’s a lot of pressure now. There’ll be people ringing up after the first of July saying ‘oops, I forgot’, but there is no way that there’s enough capacity in the industry.”

MBIE denied staff were being pressured to meet a quota, saying the fine is ordered by the Tenancy Tribunal, which sits under the Ministry of Justice.

“Our motivation is to ensure the third of New Zealanders who are renting, are provided with warm, dry, and safe rental properties, and that landlords acting as they should under the New Zealand Tenancy Law,” Hackshaw said.

Cammock said insulators were being treated as an ambulance at the bottom of the cliff, and his company had been forced to turn away property managers with large contracts because of the pressure and a lack of manpower.

“I can’t ethically commit to hiring people for a short term basis and letting them go,” he said. “Some people are just getting people on for the bubble and will cut them loose, but that’s not right.”

As well as bringing on more labourers, Cammock said his company had employed staff whose sole responsibility was quoting residential work, but they too had been overwhelmed.

“My phone has never rung this much, people are calling up with three or four houses to do by July 1st and it’s not possible – I just turned someone away this morning.”

Housing New Zealand was also under pressure as their standards specify polyester insulation rather than glass wool, which is much more common. Manufacturers in New Zealand can’t keep up with the last minute rush on supply, Cammock said, but landlords had been given plenty of notice.

“At the end of the day landlords have known for three or four years now, and the vast majority of them have left it until the last minute. We’ve tried to promote ourselves to property managers saying the deadline is coming up, but a huge chunk have left it. There’s a reasonable amount that are refusing outright – even though it could potentially only cost them $1500.”

And, because the enforcement fine will be paid out to tenants, some insulators said they’d heard of tenants making site access difficult in the hopes they could drag installation past the deadline.  

Next month’s deadline is the first of several extending out to July, 2024, by which time all rentals in New Zealand must meet the government’s Healthy Homes Standards. The standards cover everything from insulation through to heating, ventilation and drainage. From July 2021, all private landlords must ensure their properties comply with the legislation within 90 days of any new tenancy. 

But with an industry at total capacity, for landlords looking to insulate it might be too little, too late.

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