New regulations to create warmer, drier rental homes are slowly taking effect all over the country.

In Dunedin that means this year students should not be shivering through winter in grotty drafty homes. But that healthier lifestyle comes at a cost.

Thousands of students have returned to Dunedin for the new tertiary year, many adjusting to a new rite of passage -  flatting life.

They're also experiencing the benefits of the Government's healthy homes legislation with new minimum standards for rentals around heating, insulation, and ventilation.

Cutlers property manager and former scarfie Andrew James says landlords understand the benefits.

"A key word there, healthy homes. So we want everyone to be healthy in their home in their flat, so it's a good thing."

North Dunedin is well known for its scarfie flats, many boasting quirky names and a chequered history.

Students pay around $150 a week to rent a room in one of the 'glamour' streets close to campus. As conditions have improved - so too have values.

• 'I'm an easy target': Tenant handed $6500 bill for carpet over faeces, pet damage
• ANZ predicts floor will be cut under interest rates, house prices could take off again
• Baby Boomer generation owns largest share of housing stock, and their property wealth keeps growing
• Cancellation after buying $1.2m Dunedin home prompts legal victory

Latest figures from the Real Estate Institute show the median house price in morth Dunedin is now $795,000 - that's up more than 40 percent on the same time last year.

"Well rustic student flats aren't what they used to be. Because everybody wants everything the way it was at mum and dad's house, that's the way society's gone," says Central Campus Property Management owner Dave Wade.

"They'll never lose that sign on the front. But yeah they're just going to be a whole lot easier to live in," adds James.

Castle Street's '8 Man' flat was visited by judges eight years ago as part of a 'worst flats' competition. Now home to a group of second years, the flat's had a number of upgrades.

"Oh yeah, a new bathroom and a new stove. And we got a new cooktop. It's colder inside than outside still though," the flatmates say.

The stricter rules have been welcomed by the Students' Association.

But there's concern some students may have to choose between heating and eating.

"Students, while they will have it available, I'm worried that heatpumps might just become another decoration on the wall that's not going to be used often," says OUSA president Michaela Waite-Harvey.

Some properties still undergoing renovations, putting a squeeze on flats in the area.

Private landlords have until July 1 to bring their properties up to standard.