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New survey: huge demand for warmer home grants

September 15, 2009

Media Release

New survey shows huge demand for warmer home grants

Some 28%, or about 280,000 home owners, may apply for new Government insulation grants. Of these, about 106,000 intend applying in the next 12 months.

This could push demand well beyond the four-year target of insulating and improving heating in 180,000 homes through the Government’s new $323 million Warm Up New Zealand: Heat Smart programme.

Those on high incomes are the most likely to afford and take up the grants for insulation and heating, according to a just-released nationwide ShapeNZ survey of 1578 homeowners and landlords. Commissioned by the New Zealand Business Council for sustainable Development the weighted survey has a maximum margin of error of ± 2.5%.

Demand for grants for home improvement looks likely to run well ahead of Government targets, if the right loans and upgrade packages are offered.

The Business Council says the policy is hugely popular.

“The challenge is going to be how to achieve the full uptake – and cope and make the most of the potential demand to well-exceed those targets,” Business Council Chief Executive Peter Neilson says.

Additional loans:

The research indicates there are significant markets for councils, banks, and electricity and appliance retailers to provide loans to bridge the gap between the Government’s $1300 insulation and $500 clean heating device subsidies and their actual cost.

There is significant interest in loans to bridge the gap between grants and actual retrofitting costs with loans coming from

• local authorities (1% say they have, 11% will and 48% might do- total 60%)
• energy retailers (6% definitely would, 45% might - total 51%), and
• banks (4% would finitely take up a loan offer, 35% might – total 39%).

How much would they borrow? Some 22% say between $500 and $2000, and 13% $2001 to $3000 and 10% $3001 to $3,500. Some 4% are prepared to borrow $5000 plus.

Heating devices:

Some 28% of home owners whose pre-2000 homes already have ceiling and underfloor insulation, say they will or are likely to apply for a new $500 Government grant to help buy clean heating devices.

And of these 72% will choose heat pumps to spend the money on, ahead of log burners (21%), flued gas heaters (4%) and pellet fires (2%), while 2% say they’ll buy some other sort of device.

Demographics of those likely to take up grants:

While actual initial take up of the grants in their first month, July 2009, showed 60% (1,983) of the 3,282 homes retrofitted are owned by community service card holders, the ShapeNZ survey indicates the Warm Up New Zealand scheme has its greatest appeal to those on higher incomes.

The Government has increased the budget for lower income homeowners to upgrade their homes and a number of trusts and other organisations have existing programmes for this segment.

The ShapeNZ survey shows:

• 83% of those earning between $150,001 and $200,000 a year say they can afford to take up the insulation grant and pay the $3,529 gap between it and retrofitting an average house

• those earning $70,001 to $100,000 a year have the second highest affordability response (61%), compared with 38% in the average wage band ($30,001 to $50,000)

• those most likely to take up the $500 clean heating grant, if or after they’ve completed insulating their ceiling and floor, are those earning $150,000 a year plus

• some 38% of those earning between $100,000 and $150,000 a year say they are likely to take up the grant, compared with 28% of all respondents.

Extended families are the household type most likely to opt for a subsidised heat pump (100%), followed by one parent families with one to two children at home (88%), and a couple with no children at home (79%). Those least likely to opt for a pump are two-parent families with three or more children at home (55%).

Extending loans to cover performance rating of homes:

Fifty two of every 100 homeowners say they would also like loans extended to cover the cost of performance rating their homes. High performance ratings - showing how energy efficient a property is – have been shown overseas to increase home values by 8% and speed up the time to sell or rent a property by 24%.

Extending scheme to double glazing and wall insulation:

There is strong support (76% for extending the scheme to cover retrofitting double glazing and wall insulation and 58% say they might take up a grant if this were to happen – and 81% would want the work to happen in the next two years.

Upgrades during renovations:

New Zealanders also want trained and approved painters, decorators and glaziers permitted to install wall insulation. When wall linings are being replaced and painting and decorating is being done, it is usually the cheapest and most convenient time to upgrade insulation and glazing. Some 61% want this, while 24% are neutral, 7% oppose (1% strongly) and 7% don’t know.

Rented properties:

Of the landlords surveyed, 60% owned one rental property, 20% two, 5% three and 13% between four and six properties.

55% say their rental properties need further underfloor insulation, 50% ceiling insulation and 46% need a hot water cylinder wrap. However, 50% say they will not be applying for grants to insulate them and 76% will not apply for grants to upgrade heating.

Some 31% of landlords know their tenants have a community services card, qualifying for about $600 more in grants assistance, but a quarter do not know if their tenants qualify.
Some 48% of landlords say they can afford to insulate because of the Government grant and 36% say they will apply. Half say they won’t be applying. Most of those who will apply (33%) will do so for one property only, while 10% will apply for two and 6% for three.
Only 1% will apply for each of 4 to 6 and 7 to 10 properties they own.

Mr Neilson says the survey confirms there are significant opportunities to further increase the effectiveness of the scheme – and deliver warmer, healthier and more efficient homes.
Some 60% of landlords with property needing insulation intend taking up a grant to insulate.

“How we fill the gap created by the other 40% is something we need further work on,” he says.

About a million of the country’s 1.6 million homes are inadequately insulated, costing homeowners about $500 million a year in buying electricity to “heat the street”. Earlier Business Council research indicates cold, damp, mouldy homes are making about 440,000 of their occupants sick each year.
A full report on the survey is available at http://www.nzbcsd.org.nz/story.asp?StoryID=1024

ENDS

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