Is the material encasing a steam heating system asbestos? How to i determine this

If it was my house I would not worry about it if it was intact (but I would not disturb it either), significant friable spread by convection alone seems unlikely. If I had kids... better safe than sorry, hire an asbestos abatement firm to test and remove/replace if necessary.

OSHA PEL (Personal Exposure Limit, max exposure over 8 hours on a time weighted average) is 0.1 fiber per cubic centimeter, max exposure over any 30 min. period is 1 fiber/cm³.

I would get an 2nd opinion report. And then based upon that report make a decision on whether to move or not. A report that conflicts with the one that the landlord contracted for should be strong grounds to get you out of any lease.