11 Jul 2015

Cost of rental WOFs too much for Government

4:34 pm on 11 July 2015

Cabinet papers show it would have cost tens of millions dollars to bring all State homes up to the Warrant of Fitness that was being considered by the Government.

Ceiling insulation

Photo: 123RF

Opposition parties have been calling for a Warrant of Fitness but the Government instead has gone for insulating the houses and ensuring they have smoke alarms.

A survey of 400 Housing New Zealand homes carried out in April 2014 found only 4 percent passed the WOF with flying colours, while 80 percent needed urgent or high priority repairs.

The results were only made public this week.

Labour's housing spokesman Phil Twyford said the Government sat on the results for so long because it was embarrassed that so many State houses had not been properly fixed after seven years in power.

Housing New Zealand said the vast majority of the homes in this category failed because the hot water temperature was too high.

But the papers show 29 percent were not properly insulated, 28 percent were not safe or secure and 42 percent did not have the essential amenities like a working kitchen or bathroom sink.

Just under half (48 percent) of the homes needed urgent repairs - which is work required within two days or the tenants would have to move out. A further 32 percent needed high priority repairs done within 10 days.

The homes were checked against 49 criteria developed by an expert advisory panel, Housing New Zealand and the Mininstry of Business, Innovation and Employment.

They checked to see if the homes were insulated and dry, safe and secure, and had the essential amentities.

Of the properties assessed 39 were non-compliant on just one item. One home failed on 18 criteria - the highest in the trial.

The study estimated it would cost $230,492 to bring all the properties in the trial up to the WOF standard. Applying that across Housing New Zealand's 60,000 homes, the repair bill swells to $34.5 million.

A Housing New Zealand spokesperson said overall the organisation was reassured by the results of the trial.

"The average Housing New Zealand property, based on these results, would achieve a 95 percent compliance with those criteria," she said.

The trial found nearly nearly two thirds of properties did not have security stays on ground windows and Housing New Zealand said it had now introduced that standard for all its homes as result.

"We spend $200 million a year on maintenence and repairs. For example, 18,000 homes have been fitted out with quality thermal curtains from Harvey Norman."

Housing Minister Nick Smith first announced plans to develop and trial a housing WOF scheme for state homes in the 2013 Budget. That finally kicked off in February 2014 and was completed in June that same year.

Dr Smith has said he would not be rolling out the WOF scheme to the rest of Housing New Zealand's state homes. Nor would there be a universal WOF for all rental homes, be they public or private.

The Government said the measures to install smoke alarms and insulate rental properties were affordable and the costs of introducing a nationwide WOF were too high.

Dr Smith said the enforcement of insulation and smoke alarms was a more "pragmatic and efficient way of improving housing standards."

"Such a scheme would cost $100 million per year, or $225 per house for inspections alone, and these costs would be passed on to tenants in rents.

"This is money we believe is better spent on real improvements like insulation and smoke alarms. Significant issues like leaky roofs, insecure doors, excessive dampness and unsafe wiring are already covered by existing regulations, and the better response is tougher enforcement.

Housing and Building Minister Nick Smith at Crown land at Manukau in Auckland that has been identified for housing.

Housing and Building Minister Nick Smith Photo: RNZ / Kim Baker Wilson

Dr Smith said the warrant included criteria such as window stays, and strips over room-high windows which his own house would have failed, and the scheme was not feasible.

"Other issues like window stays, glass visibility safety strips and hot water temperature are best improved by education."

Dr Smith said the cost of regular inspections was also too high and many criteria were already covered by existing regulation.

He said most state homes were in better condition than their private sector counterparts.

"If we look at insulation the data indicated about one in 10 properties was not insulated, in the private sector that's more like 40 percent, so the data shows that the Housing New Zealand properties are actually in better shape than many of those in the private sector."

Among the papers released by Dr Smith to coincide with his announcement last week was a study done by the Sapere Research Group for the Ministry for Business Innovation and Employment in November 2014.

Using BRANZ data, it concluded the benefits of enforcing minimum WOF standards for all rental housing outweighed the cost of compliance.

It estimated it would cost about $653 million to bring all rental properties (both public and private) up to scratch.

However, the total benefit in terms of reduced accidents and improved health would be $987 billion - a benefit-cost ratio of 1.51.

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