Regulator flying blind on Healthy Homes compliance

The Government agency responsible for enforcing Healthy Homes standards doesn’t have its own estimate of how many rental properties comply with the rules, a year after they became mandatory.

All private rentals have been required to meet minimum standards for heating, insulation, ventilation, moisture ingress and drainage, and draught stopping since July 1 last year.

Data released to Newstalk ZB under the Official Information Act shows the Ministry of Business, Innovation and Employment (MBIE) identified breaches impacting 3699 rental properties, across cases closed between July last year and the end of May.

The Tenancy Compliance and Investigations Team received 463 complaints during that period, opening 213 General or Tenancy Investigations.

But MBIE doesn’t have its own estimate of the national compliance rate, across roughly 600,000 rental households subject to the standards.

National compliance and investigations manager Brett Wilson said getting an exact compliance figure would effectively require checking the estimated 600,000 rental properties, and that was not the regulator’s focus.

Instead, he said Government survey data estimated compliance at around 90%.

Wilson acknowledged the survey was self-reported but said what MBIE was seeing on the ground suggested it was reasonably accurate.

He said the agency was confident the majority of rental properties were meeting the standards.

“There are a lot of properties where the landlord is compliant, or wants to be.”

However, Wilson said there were also landlords who didn’t want to comply, citing the cost involved for example.

“Those are the properties MBIE particularly wants to target.”

Rather than spending resources assessing large numbers of properties which turn out to comply, the agency says it uses data to identify geographic areas and properties at greater risk.

“Our work is less about identifying where the compliance picture sits across the whole of New Zealand, it’s about addressing non-compliance.”

Wilson said because MBIE deliberately targeted higher-risk properties, it hoped to find greater levels of non-compliance through its work.

He acknowledged there was always a risk of breaches going unidentified but said MBIE undertook both proactive work and reactive investigations following complaints.

Hundreds of breaches

The figures show 327 cases involving 3699 properties were closed as of May 31, where at least one of the five Healthy Homes standards had been breached.

Breaches could cover multiple properties.

MBIE clarified those included cases opened before July 1, as well as cases from their own investigations, on top of ones prompted by complaints.

Across the 327 cases, MBIE recorded 634 breaches of the five standards.

The most common were unreasonable gaps and holes, with 133 breaches, followed by heating with 119, extractor fans with 107 and drainage with 99.

Auckland accounted for 200 of the 463 complaints nationwide, while Canterbury and Wellington recorded 52 each.
Improvement notices were issued in 71 of the closed cases, to 59 landlords.

Five landlords were issued infringement notices - but all for paperwork issues, none for breaching the physical Healthy Homes standards themselves.

Nine landlords were taken to the Tenancy Tribunal after MBIE’s own investigations.

This resulted in a total of $267,252.82 in exemplary damages, pecuniary penalties and Healthy Homes statement penalties, although MBIE said some also covered other breaches of tenancy law.

Two other cases were taken to the Tribunal due to complaints from tenants, neither finalised yet.

MBIE said not all complaints had been closed or investigations completed.

‘Tip of the iceberg’

Renters United spokesman Zanian Steele said it was “deeply concerning” MBIE did not have its own national compliance estimate and believed the enforcement figures represented the “tip of the iceberg”.

He said the system relied too heavily on tenants identifying problems and being willing to report their landlords.
Some tenants did not know their rights, while others feared losing their home or damaging their relationship with their landlord if they complained.

“The whole compliance model puts the burden on to renters, instead of MBIE.”

Steele believed thousands of cases could be going unidentified, and said complaints were not a sufficient way of gauging the scale of non-compliance.

He called for some form of independent assessment system, potentially including widespread random audits.

“If we think about issues like food safety at cafes, you wouldn’t expect a diner to play a role in assessing whether or not the food is safe.”

Meanwhile, New Zealand Property Investors Federation advocacy manager Matt Ball said it wasn’t surprising MBIE did not know the exact national compliance rate, and he didn’t believe it needed to.

He argued the figures instead suggested most landlords were meeting their obligations.

“The Healthy Homes Standards have required significant investment from rental property owners over many years, and landlords have worked hard to meet the requirements.”

Ball said MBIE deliberately targeted parts of the market where non-compliance was considered most likely.

“The purpose of a risk-based compliance programme is to find non-compliance, so the fact that they are still not finding high levels is encouraging.”

He supported strong enforcement against the small number of landlords who deliberately failed to meet their obligations but believed MBIE’s targeted approach struck the right balance.

“If you believe the vast majority of people are obeying the law, what’s the point of wasting a large deal of time and money in tying these people up in red tape?”