Energy efficiency ratings and your home: how important are they?
Energy efficiency is becoming increasingly important in real estate. This is not surprising given the environmental and financial benefits.
When it comes to what energy efficiency ratings actually mean, and how they come into play when buying a home, many people are left feeling confused.
What is an energy efficiency rating for your property?
An energy efficiency rating is largely a basic measure of how good your home is at regulating temperature, regardless of the weather outside.
Why? Electricity or gas-powered heating and cooling methods are huge energy suckers, especially when other features can significantly reduce our reliance on these means.
In Australia thermal efficiency is rated from 1 to 10 under the Nationwide House Energy Rating Scheme (NatHERS).
Low ratings indicate a home where the inside temperature fluctuates as the weather changes, meaning occupants will rely heavily on heaters and air conditioning – thus making it inefficient.
A high rating means a home remains naturally comfortable requiring less energy to run.
To gauge efficiency an assessor will look at: design, building materials used, insulation, ventilation, and windows – and how these work with the local climate.
It’s important to note this rating system just looks at the building itself, not household appliances.
Is an energy efficiency rating important when buying a property?
Typically, buyers tend to not be fussed about energy efficiency when looking at property, instead preferring price, location and style. But the experts warn against overlooking energy efficiency.
“Energy, along with municipal rating and house insurance, is a substantial cost to house owners,” RMIT senior property lecturer, Dr Neville Hurst says. “[The latter] two we have little control over, but we can make better choices about energy performance.”
Primarily, an efficient home will have lower power bills, saving you money long-term.
But despite being important, energy efficiency hasn’t yet gained the same attention as other green features, such as solar power.
“Also, many agents aren’t across the nuances and are often somewhat disengaged from the discourse,” Dr Hurst says.
This means homeowners are left on their own to research and ask questions, especially when buying established dwellings.
Home buyers should ask the agent or developer what a home’s energy efficiency rating is.
If the property doesn’t have a rating, consider what changes can be made after purchase to bring the dwelling up to scratch. This may involve additional costs, but it will be worth it, Dr Hurst says.
Are energy efficiency ratings mandatory?
In most states, all new homes must have a minimum 6-star NatHERS rating.
But, frustratingly for home buyers, some jurisdictions have introduced their own state energy ratings, rather than relying on the national benchmark.
In Victoria there’s the Residential Efficiency Scorecard, and in New South Wales there is the Building Sustainability Index (BASIX).
Homeowners will need to scope out which system to adhere too, especially when applying for state or federal building incentives.
When it comes to disclosing an energy efficiency rating, the ACT is the only state where it is mandatory to share a home’s rating with potential buyers.
Can a property’s energy efficiency rating impact your mortgage?
The amount of interest you pay on your mortgage can be reduced if the property is energy efficient.
For example, Bank Australia offers a special clean energy interest discount of 0.20% per annum for homes built with a 7-star or higher NatHERS rating for up to five years – and other banks have hinted they may introduce green home loans.
For established homes, this discount is available if quality green upgrades have been incorporated into the dwelling in the last 12 months, equal to a minimum 1-star improvement.
Can energy efficiency ratings improve your house price?
The latest realestate.com.au Consumer Omnibus Survey found that a large number of home hunters value energy efficiency as important or extremely important. However, there’s mixed opinion on whether this translates to house prices.
One review by the Sustainable Buildings Research Centre at the University of Wollongong found houses with energy-saving features attracted noticeably higher prices – up to 10% more.
However, Dr Hurst says while awareness of energy efficiency is on the up, it hasn’t yet translated into a willingness to pay more for energy efficient homes – although this may quickly change in the future.
How much can an energy efficient home save you?
While reducing carbon emissions is the main goal of energy efficient housing, there are financial benefits for buyers to consider. Environment Victoria estimates an efficient home can cut costs for the average family home by 40%. This works out to be around $1000 a year.
Generally, the higher the rating on your home the more savings you will make. For example, homeowners with 8+ NatHERS star ratings with solar panels report very low utility costs.
How can I find out the energy rating of my property?
If you want to know your home’s energy rating, and what changes you can make to improve it then call in an assessor.
You can get a NatHERS Accredited Assessor which can be found on the Accredited Assessor Directory or the Australian Building Sustainability Association website.
Non-accredited assessors are also an option, but some state authorities won’t accept their certificates.
Moving forward energy efficient homes will be increasingly important, and it’s something many home buyers need to consider.
To learn more about sustainable design and how to make your home energy efficient visit the Australian Government’s Your Home hub.
Source: REA
