Much emphasis is placed on finding great tenants, but once those tenants are secured, they need to be looked after. A happy tenant whose repairs and maintenance requests are dealt with “promptly and professionally” will pay off tenfold.
For example, if the tenant notified the property manager of a leak in the ceiling they would arrange for an accredited tradesman to repair the ceiling to save the wood from rotting and to keep the tenant happy. If this was ignored and a temporary repair was made to stop the ceiling from leaking in order to save money, not only will this cause frustration to the tenant, it is also going to cost the landlord hundreds of dollars down the track.
Achieving a relationship based on goodwill will always provide the best outcome for a landlord and should be highly valued and prioritised, by both landlords and property managers.
The importance of home heating
It is a no-brainer that well-heated homes appeal to tenants. Creating a warm, dry and comfortable home should be a high priority for landlords. Tenants are likely to stay longer in a rental property that is both warm and efficient to heat. This reduces the costs of high tenant turnover.
Tenants in a damp or cold home are more likely to suffer avoidable illness, often resulting in unplanned medical bills and time off work. Unexpected financial burdens like this may increase the risk of missed rent payments.
A rental property that’s well-insulated and has energy-efficient heating and appliances (such as ENERGY STAR® rated whiteware, energy-saving light bulbs and efficient shower heads) is easier to market and can attract a higher rent.
When looking to heat a home, it's important to consider the wide variety of heating methods on offer. This could be a modern wood or wood-pellet burner, an energy efficient heat pump, or a four-star flued gas heater. Avoid unflued gas heaters (with pipes fixed to the walls or portable) which release toxic fumes and moisture, and open fires which are draughty and inefficient.
Landlords don’t have to provide heating in every room, but they do have to provide a form of heating in any living room under the Housing Improvement Regulations 1947. To get advice about what is an approved form of heating, contact your local council.
The requirement for heating in any living room under the Housing Improvement Regulations is not dependent on whether or not the premises are insulated. The Tenancy Tribunal may consider this requirement met where the landlord has provided an inexpensive plug in heater (or similar) if the local council does not have a list of approved forms of heating under these regulations.
Ventilation
You should think about how you can make sure the tenant can ventilate the house while keeping it safe and secure. Window stays can be good for this. Extractor fans that vent to the outside are good to have in wet areas of the home such as the bathroom and kitchen to help remove damp air.
Bathroom extractor fans are often connected to the light switch so that they come on automatically and go off ten minutes after the light is turned off.
Insulation
According to Sustainability Trust, 60% of heat loss can be caused by inadequate ceiling and underfloor insulation. This can contribute to moisture issues such as dampness and mould which is undesirable for tenants and can be an expensive maintenance cost to landlords.
The Residential Tenancies Act now requires rental properties to meet certain standards of insulation to create warm and healthy homes for tenants.
Since July 2016, the location, type and condition of insulation must be stated on the tenancy agreement. Landlords failing to comply could face a $500 fine.
As of mid-July 2019, it will be compulsory for all rental properties that can take ceiling and underfloor insulation to have it installed. Landlords that do not comply could face fines of up to $4,000.
We urge owners with properties requiring insulation to look into this sooner rather than later. There are approximately 300,000 rental properties in New Zealand requiring insulation and the industry can only cope with 70,000 to 80,000 insulation retrofits per year.
It is predicted that insulation companies will be flat out at the beginning of 2019 and many landlords will leave insulation retrofits to the done at the last minute.
When these changes are enforced mid-July 2019, and owners have failed to comply to meet the new insulation standards, MBIE will have no empathy when it comes to fining landlords since they were given a 3 year notice period to insulate their property.
Landlords should take advantage of the grants and subsidies offered by the government and aim to get their properties insulated well before mid-July 2019 to avoid facing fines and potentially receive a higher rent return when they come to re-tenanting their rental and reassessing their financial situation.
Alternatively, if your property has ceiling and/or underfloor insulation, we recommend getting an assessment report done to determine whether the existing insulation in your property meets the RTA standard. Remember if a spot check is conducted on your rental property and the insulation is not up to standard, you could be fined.
Many insulated homes are receiving great rent return
The recent changes made to the RTA with regard to insulation, and other regulations aimed at making the quality of rental homes better for tenants, is also beneficial for landlords in terms of rent return. In this type of market, insulated and well-maintained properties in desirable locations are receiving great rent return.
For example, a property in Flaxmere managed by Oxygen was rented for $300 per week. Oxygen suggested and arranged for improvements to be made to the property which included the installation of underfloor and ceiling insulation and a fireplace. As a result of the improvements made to the property, the rent increased by $60 per week to $360 per week.
Example of insulation and rent return:
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Flaxmere, Hastings Rent increase of $30 pw ($1,560 pa) - after insulation was installed.
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Flaxmere, Hastings Rent increase of $60 pw ($3,120 pa) - after insulation and fireplace were installed.
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Hillary Napier, Hastings Rent increase of $30 pw ($1,560 pa) - after insulation and heat pump were installed.
Good insulation in combination with an energy-efficient heater or heating system will heat all areas of the house at a reasonable price and help keep your tenants happy and healthier through cold months.
Invest to improve your rental property to bring it above the average standard that is expected in the neighbourhood. Your property will certainly attract a higher quality tenant in a shorter time frame and also increase your gross annual yield with longer tenancy tenure and higher weekly rent. As the saying goes, sometimes you need to spend money to make money.
If you require professional advice and recommendations on how to improve your rental property to receive a higher rent return, talk to our business development team or submit a request for a free rental appraisal.
