Home rating tool will help drive improvements

Media release

10 June 2009

Home rating tool will help drive improvements to NZ housing

A residential rating tool is vital to help address New Zealand’s poorly performing houses, argues research organisation Beacon Pathway.

“If you can’t measure you can’t manage,” said Beacon Pathway general manager Nick Collins.

National’s plan to provide incentives for all New Zealanders to upgrade insulation and heating in their houses through loan and grant schemes is an encouraging start, said Mr Collins, in the wake of the recent Budget announcement. Funding provided to Housing New Zealand to renovate existing homes is another step in the right direction.

But further action is required, and not simply by Government: banks, the real estate industry, landlords and homeowners each have a part to play in improving the performance of the nation’s homes.

“Given the scale of the problem presented by our existing housing stock, we all need to pull together to deliver the standard of housing all New Zealanders should enjoy,” said Mr Collins.

New Zealand’s homes are on average six degrees below World Health Organisation recommended minimum temperatures and 45% have mould issues. Insulation estimates (based on the Census, BRANZ House Condition Survey and Environment Canterbury’s Clean Heat Scheme) indicate that 250,000 houses either have no ceiling insulation or insulation in less than half of the roof area, 700,000 houses have no (or little) wall insulation, and 740,000 houses with suspended floors have no underfloor insulation.

What’s more, our homes are seriously resource inefficient, consuming vast quantities of water and energy to operate at less than optimum levels.

“A residential rating tool will provide the extra momentum necessary to convince New Zealanders to take action and improve the performance of their homes,” said Mr Collins. “It will allow homeowners to assess their home’s performance and, importantly, reflect the value of improvements.”

There is presently an industry initiative, led by BRANZ the NZ Green Building Council and Beacon Pathway, to develop a single residential rating tool for both new and existing homes.

Home rating tools are gaining popularity in other nations such as Australia, the USA, Japan and Britain. Many of these countries are operating multiple rating systems which focus purely on new builds.

“What we’re proposing is unique: a single residential rating tool for all New Zealand homes, both new and existing,” says Mr Collins.

The intention is to go beyond a simple rating tool. A star rating from 0-10, coupled with a scheme that delivers credible independent advice about what needs to be done to a house to improve its rating, will assist homeowners in prioritising those interventions that improve the quality and performance of their homes.

“A home rating tool of this nature will help to unlock private investment to renovate New Zealand’s poorly performing housing stock,” said Mr Collins.

A simple, free self-assessed version of the rating scheme, offering 0-4 stars, will be available on line.

Interestingly, recent international research reveals that homes with performance ratings sell quicker and for a higher value than non-rated homes.

Beacon says that steps outlined in the Budget should be underpinned by a residential rating tool which would:

 provide a prioritised plan of solutions to improve the performance of the home
 be an independent and credible system to compare the performance and quality of a home at the point of purchase, upgrade or rental
 provide an incentive to invest in upgrading a home to achieve higher performance levels, giving an indicative value to the upgrades undertaken
 reduce the demand on precious energy and water resources
 generate data to assist Government in understanding the challenges that exist in the current housing stock, and target solutions.

The Government will need the support of the banks, landlords and the real estate industry if any substantial change is to be realised.

Banks have the largest investment in homes – $150 billion in outstanding residential mortgages, according to the Reserve Bank’s Financial Stability Report. As such, banks must respond to the current economic climate and offer a package of mortgages to support large-scale renovations.

Rental properties mustn’t be overlooked, and there is little reason for landlords not to act. In fact, it is in landlords’ best interest to address poorly performing homes: tenants will stay longer and the investment will be reflected in the increased value of the home.

Of course, much of this change must be driven by consumers who need to value a home’s performance as much as they do its location and aesthetics. Demand for well-performing homes will increase with consumers’ understanding of the features and benefits of sustainable housing, and the real estate industry must be ready to respond with the use of a home rating tool.

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