Media Statement 30 May 2006

Budget funding for home rating scheme

A new scheme designed to improve the energy efficiency of New Zealand houses has received funding in the 2006 budget.

$1.7 million has been allocated for the 2006/07 year to develop a home energy rating scheme which will provide a star rating (or similar) to householders based on the energy efficiency and energy performance of their houses.

Mr Parker said the Energy Efficiency and Conservation Authority would lead the work in consultation with the Department of Building and Housing, the Ministry for the Environment and other government agencies.

The rating will be applied to a house in a similar way to the star rating that is currently seen on appliances. This rating will make the owners and prospective owners of a property aware of the energy performance of their home. The scheme will also provide householders with information on how to make energy efficiency improvements to their home.

Mr Parker said this project was a significant step forward in improving the energy efficiency of New Zealand houses.

"New Zealand homes are poorly insulated and constructed compared to other countries in the OECD and, in the long term, this rating scheme will improve the quality of our homes."

Mr Parker said home energy rating schemes have been successfully implemented in Europe, North America and Australia. Overseas experience suggests that homes with higher ratings are more attractive to potential buyers.

"People are realising the benefits of having an energy efficient home, including lower power bills, improved comfort and better health. "

Extensive consultation with the building industry and other interested parties is planned during the development of the scheme.

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Home Energy Rating Scheme

What is the home energy rating scheme?

The home energy rating scheme is a rating system that is applied to a residential home similar to the star rating currently applied to appliances. This rating will allow owners and prospective owners of the property to be aware of the energy performance of their home. It also provides information to enable them to make energy efficiency improvements.

Why is this scheme being developed?

There are multiple benefits to the scheme:

· This scheme will contribute to the nationwide energy savings goals.

· Houses with a high energy rating will potentially be more comfortable to live in and will be more attractive to prospective buyers.

· Householders and landlords who take part in the scheme will receive useful information about how they can make energy efficiency improvements to their houses.

· There are significant health benefits to living in a home that performs well on the energy rating. New Zealand has a high incidence of respiratory illness which is in part a result of the cold, damp housing stock. Potential lifetime health savings for the first three years of the implemented scheme are $98 million.

· People with a house rated highly for energy performance have the potential to reduce their energy bills.

· New Zealand homes, especially homes built prior to 1977, are poorly insulated and constructed compared to other countries in the OECD. This scheme will help to improve the quality of the country's housing stock.

· The scheme will help to raise the average internal temperature in New Zealand homes that are on average 16 degrees which is below the 18 degrees recommended by the World Health Organisation.

Who is the home energy rating scheme for?

The scheme works for all New Zealand houses. The priority market is middle to high income earners, and landlords, who are responsible for pre-1977 houses, particularly those that have not yet been retrofitted with energy efficiency measures (EECA estimates this group to be in the order of 250,000 houses).

Through our EnergyWise home grants programme EECA targets low income homes for insulation projects which are funded by government, community groups and businesses.

Will the home energy rating scheme impact the value of houses?

Overseas experience suggests that houses with a high rating are more attractive to potential buyers. We imagine the same would be true here eventually. For example, if you take two houses that are equal on many things but one has a 6 star rating and the other has a 1 star rating, we would expect the higher rating house to be a more attractive home to live in.

Will the scheme be mandatory or voluntary?

The scheme is being developed is a voluntary scheme and will encourage homeowners to participate and make energy efficiency improvements to their homes.

How will it work i.e. who does the rating? How much will a rating cost? Will this be subsidised?

These details of how the scheme will be operated here in New Zealand are being worked through in the development. We are evaluating similar schemes around the globe and consulting with the building industry to make sure we develop a scheme that works well here in New Zealand.

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