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Hard to get? A rental WOF from the city council

by PCGM
On the coat-tails of reports that Wellington’s rental market is practically imploding, caught between the rock of rising demand and the hard place of investors apparently exiting the market, we wondered whether the Wellington City Council’s new rental warrant of fitness is making things better or worse. And how hard is it to get a rental WOF, really?

Spoiler alert: it’s going to be pretty challenging for a great many properties in this city.

A quick look at the rental WOF checklist is quite revealing. For starters, it’s based on the Building Code, which is where you’d hope any sensible assessment of building quality would begin. But the Council’s WOF programme then takes the standards that all new buildings need to meet, and turns them right up to 11. Merely being compliant with the Building Code isn’t enough to get your rental property a WOF – there are additional conditions that the building will need to meet before it gets the WCC’s tick of approval.

For instance, there’s a requirement in the assessment manual that all windows are either double glazed or covered by thermal drapes to more than 100% of their area (although there’s an get-out-of-jail-free provision for venetian and vertical blinds). This is obviously to try and help thermal performance – to keep heat in the house rather than using it to warm the cosmos, and it’s a laudable goal.

But to be clear, the requirement for thermally-lined drapes is nowhere to be found in the Building Code. If you build a new extension, then double glazing will need to be part of the equation in the new part of the house, but there’s no need to go around the rest of the building and replace the drapes in order to meet the needs of the building inspector.

In this case, the compliance standard you’ll need to meet for your tenants is higher than the compliance standard you’ll need to meet in your own home.

And what about the properties built in the 1980s and 1990s, that are still perfectly liveable but won’t meet the latest standards in the Building Code? There’s no way that a house built 20 or 30 years ago will be up to the requirements of the modern code – for insulation, energy efficiency or a great many other items. There seems to be some recognition of this in the assessment manual – it notes, for instance, that insulation was only a mandatory requirement in houses built since 1978, but it still requires that the insulation meets the latest standard in order to get a WOF for any home built in any era. In other words, meeting the criteria required when the house was built (and inspected and signed off by the Council) isn’t enough – it’s either up to the latest spec, or it fails.

In effect, the Council isn’t measuring the minimum standard for liveability, or even a reasonable standard – it’s measuring properties by an entirely aspirational standard, where every rental property in the city would exceed the Building Code.

This seems a bit ridiculous – let’s illustrate that by contrasting it with getting a WOF for your car.

Let’s say you own a perfectly serviceable 1998 Toyota Corolla. It’s done 200,000 kms, there’e no rust, everything still works, and it’s regularly serviced and equipped with consumables like tyres and wiper blades. It should be an easy WOF pass.

If vehicle inspectors acted like the Wellington City Council, the car would immediately be marked down for a lack of stability control (not added to Corollas in 1998), no side or curtain airbags, no anti-lock brakes, no adaptive cruise control with automatic braking, no air conditioning, no compliance with the latest Euro6 emissions standard … it would be a very long list. Your practical, sensible, cheap Corolla would be off the road, because it doesn’t meet the standards of cars rolling down the production line today.

With some justification, you might be a bit annoyed about this, and ask the sensible question – why is my 1998 car being tested against 2017 standards? To which the inspector might say, that’s just the way we work at the Wellington City Council.

It’s pretty clear that the vast majority of rental properties are going to fail the (thankfully voluntary) rental WOF programme – which should have been obvious to Councillors when they voted on the proposal. But like so much of the regulatory burden the Wellington City Council seems keen on inflicting these days – cigarette butts, cat controls, cycleway debacles – it’s clear that the Council is putting posturing ahead of practicality.

The costs of concocting and debating this doomed programme has already added to Wellington’s rates bill. But deciding whether the extra compliance and costs of rental WOFs will improve the availability of properties in a hard-pressed rental market will be left as an exercise for the reader.

8 comments:

  1. David Bond, 22. November 2017, 12:27

    Totally agree with this. The last thing a tenant needs when comfortably settled in an adequate rental, is to have the powers-that-be upset the apple-cart and push the landlord either into quitting ownership or else hiking the rent to cover over-the-top compliance-hassles. This has got to work for all parties.

    Sure, there are rentals that are no-argument-inadequate, but in a healthy market these would normally sift to the bottom of the rentability-heap and price. If rental-shortage is such that even these are in hot-demand, there is a problem with the market. Perhaps there is a case for pressuring the real ‘slumlords’, but at the end of the day who gains if these homes are lost from the rental market and would-be tenants are forced to sleep in cars?

    The better answer is to maintain an adequate supply of social-housing (fully-compliant of course!) and thus de-pressurise the private rental-market. That way, poorer-quality rentals will become hard to tenant and this will pressure landlords into acting.

     
  2. Michael, 22. November 2017, 16:13

    The problem is the slum landlords; because of them, everyone else gets hit with the over-the-top compliance etc.
    I have been overseas and, for the past 20+ years, have rented my home. When we built the house it was fully insulated, had wired-in smoke alarms, central heating etc, and double glazing in some rooms. Over the years, any problem was attended to immediately. My tenants stayed long term and were very happy. However, this year I sold the property as I could not be bothered with the council and the hassle of trying to meet their ridiculous standards.
    The irony of this situation is, not only has the rental market lost a perfectly good property, had I decided to go back and live in the house. I would not had to do anything to it, and would have been perfectly comfortable there. Go figure!!!

     
  3. Sean G, 23. November 2017, 14:10

    The Wellington rental Wof is optional. I find it hard to believe that anyone would sell a rental property because it doesn’t meet the current standards and I would find it easy to believe that someone would sell their rental property during a record high housing market and before the coalition government enacts a capital gains tax.
    Let’s upgrade all the housing stock in NZ. It will take pressure off the health system and take us closer to a developed country standard.
    Should landlords have to foot the bill for thermal efficiency upgrades? Maybe a tax rebate for upgrades would be fair. Let’s think to the future, not live in damp relics.

     
  4. CPH, 24. November 2017, 6:39

    Sean G – I don’t think you quite understand how the rental market works. Most landlords are just average people saving for their retirement. They buy a single house and the rent they get will barely cover their costs for many years, until the mortgage is paid off. For most people, rates rises and body corporate fees and compliance costs are the difference between breaking even or having to subsidise the mortgage out of their own pockets. In many years in the last decade, rents have been static or have sometimes fallen, but rates and other costs have gone up every year.
    I know plenty of people who have decided that being a landlord is no longer worth the hassles and the criticism they get all the time in the media and from politicians, particularly when they are having to stick their hand in their pocket to subsidise their rental property. They think it’s a mug’s game and are selling up to take the capital gain, and stick the money in the bank or in Kiwisaver where it can earn interest with no effort at all. The result of this rental wof will be fewer properties for renters, that’s all.

     
  5. Michael, 24. November 2017, 16:05

    @ Sean G: Believe it, people will sell their rental property because, as CPH states, many of us who have one rental property do get sick of the endless uncertainty around things like the WOF and any other “great” ideas politicians may come up with. And, it is all very well saying the WOF is not compulsory, but the implications of not having one are just as bad. Add to this the concerns around drug use in homes, even in high standard rentals, and selling up becomes a more attractive and stress free option.

     
  6. LewLewbell, 26. November 2017, 18:54

    I like the idea of a rental warrant of fitness, because the housing standards in NZ are pretty awful for a first world country, that said I don’t think this whole “Pass or Fail” test is going to be very popular, neither is it going to be particularly useful for tenants. Considering that the WoF is voluntary, perhaps they should have instead implemented an “Housing Star” type system similar to the energy star you see on electrical appliances. A house can score from 1 to 5 stars, with 1 being “liveable” meaning it has at least basic insulation and low moisture, to 5 being “Exceptional”, with double glazing and central heating. No stars means the council does not believe the house is up to acceptable standards.

     
  7. Michael, 26. November 2017, 19:33

    @LewLewbell: I agree with you, but that is all a bit too sensible for the council.

    A star rating system would be a great way to go as there are some older houses where the cost of bringing them up today’s much higher standards is exorbitant and unachievable for many landlords, but work could be done to make them more liveable to receive a lower star rating.

     
  8. Gordon, 28. November 2017, 13:41

    As usual you have bureaucrats trying to impose over the top and unworkable standards that fail to achieve the not unreasonable objective that rented housing should meet some minimum standards. Instead of this the make-work officials go for some gold-plated standard that virtually no rentals will meet. One might have thought that elected Councillors might try and bring some sanity to this but given WCC’s overall record this seems unlikely.

     

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