Property managers urged to dump landlords that don't insulate

Property managers are being encouraged to consider cutting ties with landlords who are failing to meet new insulation standards.

The standards were introduced as law in 2016, but landlords have had until 1 July this year to ensure their rental properties have floor and ceiling insulation where possible.

Earlier this month, the Ministry of Business, Innovation and Employment (MBIE) estimated up to 100,000 properties did not meet the standards.

Despite shortages and insulation providers struggling to meet demand MBIE has said it will not be granting extensions.

With those breaching the rules facing thousands of dollars in fines, the Real Estate Institute has been encouraging property managers to consider distancing themselves.

• This story was originally published by RNZ

"The landlord may get a fine of up to $4000 and a property manager that works with a landlord that hasn't insulated is also potentially getting a fine of up to $4000, so they're both liable," its chief executive, Bindi Norwell, said.

"We've been recommending property managers not to work with non-complying landlords but ultimately it is their business decision about whether they want to take that risk.

"I guess what we're warning now is, we're really reminding property managers they only have effectively one day to work out if they want to work with non-compliant landlords that don't meet the standards because they potentially are at risk of fines as well. It's an important decision.

She said the industry had done a good job and estimated were that 80 to 90 percent of landlords would meet the standards by Monday.

Landlords could expect random checks and audits from Monday, Ms Norwell said, with the government making it clear the rules would be enforced.

A third of the rental property owners under the Property Investors Federation use a property manager.

Its chief executive Andrew King said there had already been property managers "ditch" landlords over the issue.

"But it's also fair to say that some of these landlords assumed that the property manager was actually managing the property for them and should have actually told them what the regulations were and if they in fact met them."

He said it did not seem fair, and he did not think property managers had done their jobs.

"We have heard of people who have just got a notice a few weeks ago asking them to confirm themselves whether they actually meet the new standards and if they didn't [the property manager] would no longer represent them managing their property; effectively they'd dump them.

"I don't think you'd call it conflict, it's more just that some property managers, hopefully the majority, have been very professional and got onto this early and actually provided good information to their customers and their clients. Others haven't and in fact have left it to the owners of the rental property to actually do that work for them."

He said owners who had lost their property managers would find it difficult to get another if their property was not yet insulated, and they were now out of time to get it up to standard.

"They're going to be in a tricky situation and I hope there is some leeway towards them because if their tenants do take them to the Tenancy Tribunal they could be up for quite large exemplary damages or fines against them.

He said the Property Investors Federation had been urging members to get their properties insulated for the past decade, including arranging for deals on product and services to help them do so.

"We would hope that the majority of them have now got it and they've met the legislation, which we have endorsed, if they haven't they've got to get onto it as soon as they possibly can because they are leaving themselves open to the risk of being taken to the tenancy tribunal."

He said a recent survey of members indicated less than 4 percent of the 7500 rental properties owned by respondents wouldn't meet the requirements.