Adding Insulation Not Cost Effective
The NZPIF is taking an active part in shaping the new minimum standards for rental properties, writes Andrew King.
1 April 2016
It Just Isn't Worth The High Cost To Achieve A Modest Improvement In Efficiency - Andrew King
Over the past month or so, NZPIF representatives have attended workshops on the Residential Tenancies Amendment Act, more commonly known as "Minimum Standards for Rental Properties". We have also made two written submissions and attended a select committee hearing on the Bill.
During this process, government officials and MPs have been subjected to a high level of pressure from other groups who would like to see even higher standards than those put forward in the Bill.
These calls are mainly from organisations involved in selling or installing insulation, but also from groups who advocate such higher housing standards as Beacon Pathway, the Children's Commission and the Otago Medical School.
An advantage of attending the Select Committee hearings is they are a public forum, so you can listen to other submitters for an idea of Select Committee views of their arguments.
While some organisations are still advocating a full rental property WOF, most submitters are looking for higher insulation levels for rentals already with insulation.
The Bill proposes rental properties with existing insulation must be at 1978 regulation levels, which are about a third less than current standards.
Those who would like higher insulation levels say the current insulation standards have been applied for good reason and therefore should be the minimum standard for all rental properties, whether they are already insulated or not. While a valid argument, it doesn't look at the increased benefit of the insulation or the cost.
The NZPIF submitted a graph from a study showing the vast majority of insulation benefit was at the 1978 level of around R2. While current standards have levels of insulation that are 50% higher than the 1978 levels, there is only a 2.5% increase in efficiency.
Unfortunately, the cost of topping up insulation from the 1978 levels is almost the same as completely installing new insulation. It just isn't worth the high cost to achieve a modest improvement in efficiency.
We made this point very clear and it seemed to strike a chord with the MPs on the Select Committee. They asked an insulation installer the possible cost of topping up the insulation to current standards. His answer was between $2,500 and $3,000.
The Select Committee put this to an industry expert and asked if he thought this backed up the NZPIF submission that increasing existing insulation to current levels would not be cost effective and would put upward pressure on rental prices.
The expert tried, but couldn't really deny this. So we are hopeful that common sense will prevail and the Select Committee will recommend to Parliament that the 1978 insulation standards detailed in the Bill should remain. There is no doubt this level of insulation will provide an excellent level of comfort for tenants without seeing their rental prices increase.
The Select Committee is scheduled to release its findings in a report to Parliament on June 8, leaving very little time before the Act comes into force on July 1, 2016. We will keep members updated with any decisions.