Industry insights | 18 May 2023

The new National Construction Code: energy efficiency changes

Please note, this article was originally written before the VBA announced an extension to the transitional arrangements for the livable housing requirements and the updated energy efficiency requirements. It has since been amended to reflect these changes. For more information on the changes, see this update

It was announced last year that the new National Construction Code 2022 will require some key changes for new buildings – adopting a minimum standard of 7 stars under the Nationwide House Energy Rating Scheme (NatHERS) assessment, and increased liveability standards. Here, we’ll be covering the NatHERS-specific changes, with a separate blog dedicated to outlining the changes in liveability standards available now.

These changes apply to different building classes, with liveability changes applying to single dwelling or terrace-style housing (Class 1a buildings) and domestic apartment buildings (Class 2 buildings). 

Energy Efficiency Changes 

The transition period to 7-star homes has begun, and will end on May 1st, 2024. This means that from this date, all new-build homes will need to adhere to this new energy efficiency rating. This transition period allows for the construction industry to make the adjustments necessary to eventually bring all new projects in line with these standards. 

The NatHERS scheme provides homes with a star rating out of ten, based on a calculated estimate of a home’s potential energy use, for both heating and cooling. It’s based on information such as the home’s design, construction materials, and the climate in which it is situated. It’s designed to make Australian homes more comfortable to live in with minimal additional measures, helping residents to save on energy bills. 

If a dwelling is rated at 0 stars, this means it offers no insulation from external temperatures. A 10-star dwelling is able to maintain a comfortable temperature inside throughout the year, despite external pressures. The more stars a dwelling has, the less energy it consumes, which reduces energy expenses. 

Manager | Building Design at Millar Merrigan, Liam Barnett, outlines that there is a potential challenge in the eyes of clients and builders of extra cost. While most of what is needed to achieve a 7-star rating are possible through innovative design, a 2021 NCC analysis shows that the additional cost of material required for a single-storey four-bedroom home to meet these standards would incur an additional cost of around $3,310. While this equates to an additional $150 per year increase on a 30-year mortgage, there is an expected annual energy bill saving of at least $300 per year – so homeowners could actually save a minimum of $150 net per year.  

Despite the extra initial cost, there are long-term benefits and savings to make from more energyefficient houses, especially with increasing living costs and energy prices going through the roof. If these keep rising, homeowners will make their money back even quicker 

To configure the rating level of the home, things such as construction type, materials, windows, glazing, lighting and insulation are considered, as well as the size and function of rooms, size and specification of openings, dwelling orientation and building location.  

As such, most of the decisions made during the early design stage, affect the working drawings in which everything gets individually listed, documented, and rated.  

Why make these changes? 

It’s estimated that half of the homes that exist in 2050 will have been built from 2019 onwards, so with retrofitting costing significantly more than making advancements in energy efficiency in the planning stages, it’s important to take this into consideration early on.  

Energy efficiency standards in Australia lag behind those of other major economies, meaning Australians have some of the highest energy bills in the world as homeowners take on the long-term costs of low home energy efficiency performance. 

Liam explains that “it’s important that homeowners understand how the new requirements will pay themselves off when considering the long-term benefits; there’s plenty to be saved with more energy efficient housing not to mention a more comfortable space to live. There should be quick results to show for the upfront investment. 

For developers who may not be enthusiastic about implementing these changes, Liam says there are benefits for them to see too.  

While it may not benefit developers directly, there are still benefits to the change. It can be used as a selling point on the property, helping to differentiate theirs to [make it better than] older properties that were made to lower efficiency standards.  

With these changes coming into effect soon, it’s important to consider how to best implement them now.  

At Millar Merrigan, we are on the pulse of industry changes and updates, to ensure we can successfully navigate these for all our projects. If you are looking for advice or support for adapting your projects to the new NCC changes, contact us today. 

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