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Insulating For Investment

Is it necessary to insulate a cold property at a tenant’s request?

By: Property Investor Team

1 December 2015


We’ve just moved into an apartment. Before we moved in we weren’t able to check the garage as the tenant showed us through and he wasn't very forthcoming. We took the place and I asked the property manager if it was possible to get the place insulated. He said he’d get back to me. When the key handover happened I asked again and he said the house isn't that cold. He was wrong. It’s freezing cold. Is there any way to ensure this gets done?


Under the Residential Tenancies Act, a landlord has an obligation to comply with all legal requirements in respect of building, health and safety so far as they apply to your rented premises.

Whether a landlord is required to insulate the premises may depend on the age of the property and what requirements were in place at the time the property was constructed. The Building Code sets the standards that buildings (including residential premises) must meet.

Buildings are only required, however, to comply with the Building Code in force at the time the building was built. For more information about the regulations that apply to a particular premises you can contact the council in the area the property is located.

If the landlord is in breach of any legal requirements applying to the premises, a tenant can give the landlord a notice to remedy the situation and, if not complied with, can make an application to the Tenancy Tribunal to have the matter resolved. Such an application could include a “work order” – an order requiring the landlord to remedy the breach, or an order for ‘exemplary damages’ – a monetary sum awarded to the tenant should it be deemed an unlawful act has occurred.

You could also seek termination of the agreement. You can also find information on a landlord’s responsibilities to provide a safe and healthy home at: www.tenancy.govt.nz/maintenance-andinspections/ regular-maintenance or by calling our Tenancy Advice line on 0800 TENANCY (0800 836 262) Monday to Friday between 8am and 5.30pm. - Alan Bruce


Legal Liability Anomaly

I am a tenant and I have legal liability insurance with AMI. My landlord has home insurance with NZI. I (the tenant) was drunk at a party and did a kind of 'jump and sit' (a careless action) on to the bench edge near the oven. The glass cook top cracked and it now has to be replaced.

AMI said my landlord needs to make a claim first and make me liable. My landlord has made a claim with NZI (the excess is $650), but NZI say they won’t make me legally liable. I’ve read the RTA and section 40 parts 4 and 2a should apply, and I’ve read that PLA Section 268- 269 may be giving legal immunity to me (the tenant). So my questions is: Why won't the insurance company make me liable? What piece of legislation says I'm not?


Good on you for your honesty with your landlord. The perceived anomaly here is because of the recent precedent under “Holler vs Osaki” and the implications this has had on the Residential Tenancies Act whereby you would need to have intentionally damaged your landlord’s property to be liable. Up until that decision, a tenant would have been liable for damage to the landlord’s property caused by the negligence of tenant.

The other aspect to mention is that where a tenant and a landlord are both insured there is an agreement between most major insurers called the “Standstill Agreement” whereby losses lie where they fall. Additionally, in your case both AMI
and NZI are owned by the same parent company, IAG, so recovery against AMI by NZI may be redundant. - Myles Noble


Trans-Tasman Taxes

My property is rented out in New Zealand. I work and live in Australia. I file a NRIR3 tax return in New Zealand for my property’s rental income and expenses. I also show income and deductions for this property on my Australian tax return as foreign net income or loss which is allowed to be offset against my employment income earned in Australia. Do my losses keep accumulating in New Zealand? And how do I deal with this on my tax return in New Zealand?


Assuming you are a non-NZ tax resident, you are not required to declare your Australian earnings in New Zealand. In this case your losses on the New Zealand derived income from the local rental property continue to accumulate.

If the property turns the corner and becomes profitable these profits will offset the losses. If you return to New Zealand and work, you are able to offset the accumulated losses against this future income. If you move into the property a deemed disposal occurs and you must deal with a depreciation recovery. This may trigger income that will offset some or all of the losses. This would also be the case if the property was sold.

Just a note on tax residency: IRD has recently released a new interpretation statement on tax residency that elevates the significance of retaining property in New Zealand, especially if it was your old home, and you are still legitimately being considered non-resident. If the property is “suitable for your occupation” it could be viewed as a permanent place of abode in New Zealand that could call into question assumptions around your tax residency. - Mark Withers


Fast Moving Market

My partner and I are first home buyers in Hamilton. We are both 32 with a combined deposit of around $140,000 (with some to spare). Should we invest in our own home in an area with good capital growth, or focus more on purchasing an investment rental?

We are paying $240 per week in rent and so saving money. We have the chance to purchase a house for potentially a very good price in around six months. But we feel the market is moving too fast to wait.


The market is moving really fast. But if you can purchase at a great price, maybe lock the price down now with a long settlement. This means you can get the benefit of any capital growth in the meantime, but also continue to save cash. - Kris Pedersen


Unreliable Property Manager

I signed up with a local property management company in Palmerston North to manage my rental property. The agent is extremely unreliable in getting anything done or responding to e-mails. I signed an agreement in which I am
supposed to give them three months’ notice.
Is there any way I can cancel it at shorter
notice considering that I am not getting any
value out of the arrangement?


As long as the agent is fulfilling their required duties you will need to follow the cancellation process and give the required three months’ notice to terminate. Your property manager is, however, your agent, and must act in accordance with your best interests. If you feel that is not happening I suggest you call them and express your concerns. You haven’t said how long or frequent the delays have been in their responding to your e-mails.

The manager may be able to sort these communication issues out and get things back to a good working relationship with you. This can save you the need to build another relationship with an alternative property manager. If you can’t get the level of comfort you need with the property manager, you should try to negotiate a tidy termination of the management. Failing that, you can give the required notice and terminate the management unilaterally. The alternative is to make an application to the Disputes Tribunal to terminate the agreement. The outcome of this is not certain, however, and it will cost you time and the application fee. You will probably find the easiest course is to simply give the required notice. - Bernard Parker

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