Healthy Homes Compliance Costs
The Healthy Homes standards have created specific minimum requirements for all New Zealand rental properties in respect of heating, insulation, ventilation, draught stopping, moisture ingress and drainage.
All rental properties in New Zealand must meet each of the five standards for Healthy Homes compliance.
Universal application of the standards and their requirements apply to all residential tenancies, i. e. even a long-standing, historic tenancy where no changes to the agreement have occurred must still comply.
If compliance work has not yet been completed, it’ s safe to assume most properties in New Zealand will need some form of work done to meet the standards and to prevent the risk of landlords incurring fines associated with noncompliance.
The ability to claim back any expenses incurred through healthy homes compliance work will vary depending on the existing condition of the property and what work needs to be done.
The rules around the tax deductibility of residential rental property expenses are, in theory, quite simple and the condition of the property on the day you acquired it establishes the benchmark.
Any subsequent expenditure incurred in getting the property back to that condition is a legitiate tax-deductible expense, but any spending on improving the property beyond the condition it was on that day is classed as capital improvements and is therefore non-deductible.
Examples: Repairing a broken extractor fan that already exists to comply with the healthy homes standards is a claimable expense. Upgrading an existing extractor fan that is not powerful enough, or installing a new extractor fan where none existed previuosly would be a capital expense so that cost is not deductible.
Repairing an underfloor moisture barrier that has degraded over time would be classed as a repair and a claimable expense. Installing new underfloor moisture barriers that did not previously exist would be classed as a capital improvement so would not be a claimable expense.
If the healthy homes standards work required at your rental property is a mixture of upgrades, repairs and new installations, we recommend you speak with a chartered accountant to ensure you are complying with IRD requirements.
For more details on the specific healthy homes standards and what may be required at your property, please request a free copy of our Landlord Information Guide from your Ray White property manager.
10 TENANT INFORMATION GUIDE