Earlier this month, Console’s Natasha Anich and Courtney Scales sat down with Property Safe’s Tracey Worthington to chat about all things Healthy Homes, and the critical time frames facing real estate businesses to get their property portfolios in order, and compliant. This extract is from a webinar held on November 18, 2020 (watch the webinar).
The next deadline is 1 December 2020. By December 1, all new and renewed tenancy agreements must contain a statement of the current level of compliance with the Healthy Homes Standards (HHS).
From 1 July 2021, private landlords must ensure their rental properties comply with the Healthy Homes Standards within 90 days of any new or renewed tenancy. This legislation also stipulates that all boarding houses (except Kāinga Ora and Community Housing Provider boarding house tenancies) must comply with the healthy homes standards.
Feeling unprepared? you’re not alone
We asked Tracey to give us the general sentiment of property management agencies as they prepare their landlords for the changes, and conduct their own preparations to meet the Healthy Homes requirements.
Tracey says, ’For some agencies, there is a high degree of confidence and they are really well prepared. But there are really large numbers [of agencies] that are struggling to comprehend how they are going to meet these looming deadlines.
‘They’ve either left it too late, or they have relied on a tradesperson to do the inspection instead of a qualified inspection company—and they are finding that the tradespeople simply can’t cope with that level of demand.
I’m also hearing that these agencies have in some instances partnered with companies (trades), who may have a conflict of interest. They’re finding these businesses appear more interested in doing the rectification or remedial works required to pass compliance, than they are interested in completing the inspection in that specific timeframe.’
Barriers to all properties
The biggest barrier property managers face is reluctance by owners to prepare their properties for the change. The second barrier they face is poor organisation—too many agencies have simply left it too late.
Many owners are reluctant to spend the money to get a professional compliance report for their investment property/ies completed. It appears that a great many of them still don’t understand that this is an actual legal requirement and not just something that the property manager is asking them to do. This is concerning for property managers, to say the least.
It’s possible however too that there are property managers out there feeling anxious about forcing this issue with their owners. But alas, this is something that the owner cannot opt-out of.
One way or another, information must be gathered and provided to the property manager to put in with the tenancy agreement.
The risk of no or little action
So what is the risk to landlords and property managers if they have non-compliant properties? Beyond the risks to tenants and landlords of non-compliant properties causing injury or fatality, there is also a financial risk to landlords for non-compliance… and property managers as well.
Tracey Worthington says, ‘There is a $500 fine for not completing the Healthy Homes Statement correctly or not including it in the tenancy agreement.‘The Tenancy Tribunal may also award exemplary damages with a financial penalty of up to $4000 against the landlord for failure to comply. More often than not, you will find that the sum of money is awarded to the tenant. Between 1 January 2019 and 1 February 2020 – renters in NZ who have taken their landlords to tribunal over insulation laws have awarded $124,000.
Tracey believes that there will be more of these scenarios taking place for a failure to comply with the Healthy Homes Standards.
And how likely is it that property managers will be audited? Well, the MBIE (Ministry of Business, Innovation and Employment) has a team who visit property management businesses to check smoke alarms and insulation compliance of properties under management. MBIE will be adding HHS compliance to their auditing checklists as well.
Managing a brand new build doesn’t make you exempt
We asked Tracey about the situation where property management businesses are taking on management of newly built properties. Would these properties still be required to meet the Healthy Homes Standards?
Tracey says, ‘You must have the relevant information [about a property] to complete the Healthy Homes Statement in a tenancy agreement irrespective of the age of the property.
A new build must comply with the Healthy Homes Standards and, given that the Building Code & the HHS Legislation do not mirror each other, a property manager should not assume that a new build will be compliant with HHS. The builder may be able to provide a HHS statement, but if this cannot be obtained, then a HHS assessment should be completed.’
Practical tips to take back control
There are steps property managers should take now to be prepared for the first (1 December 2020) and following deadlines (1 July 2021):
- Get started: there is no more time for procrastination. If you haven’t got started or need some help managing the Healthy Homes checks on the properties you manage, get in contact with the team at PropertySafe. They’ll be able to assist you to inspect your properties, and they’ll make sure to give you an independent Healthy Homes Report and a 13A statement of compliance issued to those properties that pass.
- Don’t be afraid to speak with your owners. You really need to get the message across about their requirements as a landlord. Educate them about the legislation and make them understand that this is something that is legislated and that they must comply with.
- Share the MBIE Statement with them. One look at this 13 page document will help reluctant landlords understand the level of detail required to meet this compliance statement. They’ll want you to handle this process for them.
- Have a work plan set with your owners. If the HHS Report identifies areas requiring rectification works, share these with your owners and come up with a plan to help them navigate that which needs doing.
- Preparations to fund rectification works. Prepare your owners for the additional financing required to make their property compliant. Speak with them about keeping money aside or look at seeking some funding to get the required work done, within the time frame it has to be completed. It’s the nature of investments to have costs associated with them, and ultimately, the HHS is a cost of doing business for landlords.
Managing the compliance work to be completed
Any work that needs to be completed can be scheduled through your trust accounting, property management or maintenance management software, like Console Cloud.
Once the work has been completed and the appropriate invoice and paperwork detailing has been received from the trade supplier, forward that document to your inspector, such as the PropertySafe team. Any document proving works can be used as proof for the PropertySafe team.
Once received, and after checking the detail is correct, the rectified item will then be made compliant on the 13A Statement.
It’s important to note that your Healthy Homes Report will not be updated. The Healthy Homes Report is a static document on the property as at the time and date it was completed. The 13A Compliance Certificate gets updated but is only issued to the property manager once all the Healthy Homes Standards have been met.
An industry first: compliance management feature
The best system for managing your properties’ compliance requirements is through a central compliance workflow in Console Cloud. In early 2019, Console released the first fully automated compliance workflow in the industry. In one place, property managers are able to effectively manage their property portfolio’s compliance and history.
This means an evolution from disorganisation. No more white boards, excel spreadsheets, or manilla folders on the property manager’s desk with endless lists of tasks you need to do and keep track of listed on a post-it note tacked to the front of the file. With Console Cloud, leading real estate businesses are capturing, tracking and automating property compliance and identifying non-compliance without manual investigation.With compliance reports available to everyone, the whole of the business can be across any areas of risk and non-compliance.
There are three parts to managing compliance in Console Cloud: (1) capturing the compliance record at the property level, (2) the compliance workflow, and (3) automation. In the recent ‘Get your rentals Healthy Homes ready’ webinar, Console Cloud’s Growth lead, Natasha Anich, demonstrated how to manage compliance in Console Cloud.
‘Using Console Cloud to manage your compliance lets you manage the risk to your business, with visibility and full control. It means you can manage by exception. That means capturing anything that doesn’t fall into a workflow, says Natasha. As part of the regionalisation of Console Cloud, Healthy Homes Standards for compliance have been enabled in all NZ Console Cloud customer offices by default. They will have this in their office in addition to other compliance workflow features, such as managing smoke detectors, pool fencing, and asbestos.
Track each property’s compliance
The platform helps you track each property. With visibility of the level of compliance and any communications sent to creditors. This includes any respect to the return of HHS reports and the relevant 13A Statement of Compliance to your property in Cloud. All managed in one screen.
Console Cloud does the heavy lifting for you. Saving you time on administration with smart automation including templated communications to issue requests to the creditors assigned to your properties. This includes carrying out an inspection on the property, and the return of documents, within the time parameters you set in Console Cloud.
For example, Console Cloud will automatically send out an email/ or text to your creditor 30/60/90 days out from the expiry date that you have set in the platform for a particular compliance item, leaving you to input the return of documents to Console Cloud.
You can also easily and quickly bulk upload your 13A Statements of Compliance into Console Cloud through the compliance workflow.
Reporting on your property’s compliance status
In addition to seeing your upcoming property compliance items, Console Cloud features a compliance report that at a high level, allows users to identify which properties have compliance items entered against them. This includes identifying whether a compliance item has in fact been added to a property at all. This is very useful when performing an audit of compliance items. Simply apply a filter to the report to see all properties missing compliance items.
So if you are faced with the situation where the MBIE compliance team comes knocking on your door, you can easily produce a report of all properties you manage that are compliant for all areas under the Healthy Homes Standards. Additionally, you’ll be able to produce documents for closer identification stored in Console Cloud, at any time from wherever you are.
Want to take a closer look at Console Cloud and compliance? Register for a demo.
PropertySafe specialises in professional & independent compliance & safety inspections on residential owner-occupied and tenanted properties across Australia and New Zealand.
What sets the PropertySafe reports apart from other reports out there?
PropertySafe provides a professional and independent report addressing all the requirements of the Healthy Homes Standards. Our report also includes a high-risk safety check covering a myriad of areas looking for gas, electrical, building, smoke alarm & asbestos hazards which may endanger the tenant or property manager. Any high-risk issues will be reported back to the property manager. This additional inspection helps to further protect both the Landlord and Agency with their Duty of Care to the tenant.
When working with PropertySafe there is no conflict of interest as we do not undertake any of the rectification work.
What is the report turnaround time after an inspection has taken place?
The report is usually returned back to the owner or property manager within 48 hours of the assessment being completed.
To learn more about Property Safes’ Healthy Homes Service
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Console are providers of trust accounting software and end-to-end property management solutions, for property managers and agents in Australia and New Zealand.