Massive upheaval to building code as all new homes move to seven-star energy rating

In one of the biggest upheavals in the building sector for a decade, all new Australian homes will have to comply with tougher energy performance standards within a year.

State and territory building ministers met with ministers on Friday (26 August) and agreed to boost the minimum energy efficiency standards for new builds from six to seven-star ratings.

The changes will lead to cheaper energy bills for Australians who buy new homes once the new National Construction Code (NCC) officially comes into effect from 1 May 2023, but with a transition period granted to 1 October 2023 to allow the industry to adjust to the change.

The agreed changes to the NCC represent the first significant adjustment to energy standards in a decade. The NCC sets out the minimum requirements for areas such as safety and health but had often been criticised for its limited requirements in relation to climate change.

The changes are expected to cut the thermal energy use of homes by about 25 per cent.

The residential sector accounts for almost a quarter of Australia’s electricity use and about 12 per cent of greenhouse gas emissions.

Federal assistant minister for climate change and energy, Jenny McAllister, said, “Energy-efficient homes are more comfortable to live in, and cheaper to heat and cool and we want more Australians to have access to them.”

Around 1.1 million homes are likely to be built in the next three years.

The star rating assesses how well buildings performed in terms of heating and cooling. The code introduces a ‘whole-of-home’ budget approach to managing the energy use of fixed appliances, including heating and cooling, hot water, lighting, and pool and spa pumps.

The new provisions will also mandate that all apartments and some commercial buildings are built to allow electric vehicle (EV) charging capability in all car spaces and rooftops that are able to support solar photovoltaic (PV) retrofits.

New accessibility standards for homes and apartments include step-free street or parking entry to the building, accessible doorways, a toilet on the entry level, a step-free shower and reinforced bathroom walls to support the installation of grab rails.

This will increase the availability of new homes with accessibility features to 50 percent of Australia’s total housing stock by 2050.

Impact for decades

Property Council of Australia Chief Executive Ken Morrison said it was pleasing to see the ministers commit to the higher standards, which will in turn deliver energy bill savings and better living conditions for Australians, as well as reduced emissions.

“It is great, that after years of work and advocacy on this matter, ministers have made the commitment to improve the efficiency of all new homes built in Australia,” Mr Morrison said.

“Lifting the energy rating from 6 to 7 stars has the potential to slash the average household energy bill by up to $576 a year, so for homeowners and renters alike, a 7-star home means big savings, as well as higher levels of comfort,” he said.

This result comes after a major community campaign led by Renew, in which 105 organisations across the consumer, energy, health, climate, community and property sectors called on governments to lift standards.

It will reduce deaths during extremely cold or hot weather.

- Dr Fiona Gray, CEO, Renew

The outcome is the result of a four-year collaborative process led by the Australian Building Codes Board (ABCB) and is based on the Trajectory for Low Energy Buildings, agreed in early 2019 by state, territory and commonwealth energy ministers.

Dr Fiona Gray, CEO of Renew, said the uplift in energy standards will result in a cut of emissions by up to 78 million tonnes by 2050.

“It will reduce deaths during extremely cold or hot weather and is also expected to lower the cost of grid upgrades by up to $12.6 billion by 2050, and reduce poverty and inequality by ensuring higher standards in social housing and private rentals,” Dr Gray said.

“Renew has found that building 7-star homes with solar and no gas can cut bills by over $1000 a year.

“With energy prices rising, there’s never been a more important time to tackle bills – and we can do it by making our homes more efficient and powering them with renewables.

“Smarter design in the way we build our homes will make the transition to renewables faster and cheaper,” Dr Gray said.

ACT Sustainable Building Minister, Rebecca Vassarotti, said “building homes that really are looking after people, and are looking after the planet, is becoming more and more urgent.

“The homes we build today will stand for many decades, so it is vital we build homes that are climate-resilient, comfortable and accessible,” Ms Vassarotti said.

“We will ensure that industry is supported through these changes.

“I believe 12 months is sufficient time before the introduction of these new standards, giving them time to prepare and adjust.”

The changes to the building code come as bank and non-bank lenders also embrace green loans.

Discounted home loans for properties that meet exacting environmental standards have been offered by six smaller lenders for a year or two and the Commonwealth Bank (CBA) recently moved into the green loan space, shaking up what was a niche market.