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How important are energy efficiency ratings in real estate?

As climate change prevention becomes more of a priority for local governments it seems logical that we’ll start seeing more regulations come in to enforce cleaner living, as well as the ongoing incentives to take up solar power solutions.

One area where energy efficiency is being ramped up is real estate. Taking up the challenge to switch to more energy-efficient housing already has big benefits, including reducing greenhouse emissions, increasing living comfort and reducing your energy and water usage. As we move forward you will also see added bonuses including more appealing property listings when you go to sell.

As new energy rating systems are rolled out, the hardest part is understanding how energy ratings come into play for real estate and what they actually mean, either for setting up your home to be energy efficient or looking at current properties on the market to buy.

What is an energy efficiency rating for your property?

An energy efficiency rating measures how well your home copes with regulating a consistent temperature, regardless of the local weather conditions outside. The higher the energy efficiency the more your home is able to maintain a consistent temperature with little assistance from powered devices like air conditioners and heaters.

Lower ratings are especially prominent in older homes where inside temperatures fluctuate as the weather changes, not only making living uncomfortable but also forcing occupants to turn to energy sources to heat and cool their home more frequently and for longer periods.

Why is energy efficiency important?

Australia is the world’s 14th highest carbon emitter, a high number considering we are one of the more sparsely occupied countries. What we do have is weather extremes. From hot and muggy tropical north to the frigid and icy winds of the south and the hot days and cold nights of the desert in between. That means Australians all over the country rely heavily on powered devices to keep their homes comfortable year-round.

Electricity and gas heating and cooling systems suck huge amounts of energy and have a high impact on the environment. When you consider that every modern home has multiple heating and cooling units, some of which are run all day and night, we can see a need to create energy-efficient homes that cut back on our dependence on power.

There is the added incentive of significantly reducing energy costs for your home by increasing your energy efficiency.

What is a household energy rating?

Household energy ratings refer to the set-up, design and materials used throughout your home. This is separate from the star-energy ratings that come with appliances. When you use a combination of high energy efficiency in your home and your appliance choices you get double the benefits of reducing energy costs and decreasing toxic emissions into the environment.

The thermal energy efficiency rating for Australian homes is shown from 1 to 10 and has been designed by the Nationwide House Energy Rating Scheme (NatHERS). A high rating means a home requires less energy to run and is naturally comfortable year-round.

Unfortunately, some states are using their own energy ratings, rather than relying on the national benchmark, which is causing confusion for home buyers and can be misleading.

What features offer high energy ratings for properties?

  • Well insulate ceilings, walls and floors
  • Window position
  • Living Room position – to capture warming light from the North
  • High-performance windows such as tinted, clear glazed or double glazed as well as suitable shaded with awnings.
  • Internal window treatments – curtain materials or blinds matched with the window position to allow or block light and cold
  • Solar panels and solar hot water heaters
  • Energy-efficient lights
  • Draft-proof gaps – doors, windows and vents

Are home energy efficiency ratings mandatory?

Older homes are not required to meet any particular rating for energy efficiency. Even so, doing what you can to increase the efficiency of older homes will make a noticeable difference to your living comfort, and energy costs and may even increase the value of your home if you sell.

When it comes to newly built homes, most states require that these meet a minimum 6-star NatHERS rating. As this is still new, many builders, real estate agents and buyers are not as active at taking this on board or insisting that these regulations are met, or even being able to clearly establish what energy efficient measures have been carried out.

If needed a NatHERS Accredited Assessor can be called to provide an assessment and certificate.

Canberra is leading the way in Australia with strict energy rating requirements as part of property sales, although I doubt it will be long before other states follow suit, so it’s well worth adopting energy-efficient approaches now.

What about energy-efficient appliances?

Higher star-rated appliances are more expensive to purchase but will give back in efficiency and use less energy and water to run. Some systems are naturally more efficient than others, like a ceiling fan being far cheaper to run than an air conditioner.

When it comes to replacing older appliances or setting up your new home consider that gas fuelled systems create considerably fewer carbon emissions than electricity, they are also cheaper to run (using natural gas supply).

As well as high-star appliances you can look into solar options that include PV panels and solar hot water solutions.

If you are looking to build or buy a property with high energy efficiency you’ll have to really push hard for answers and dig deep in your research to nut out where a property is at. That’s only for now. I fully expect that regulations will become tighter with mandatory codes enforced for new homes across Australia in the near future. When that happens there will be a significant difference in how home value is assessed and how properties are listed. Putting in the work now to ensure the best possible energy efficiency for your property through passive solar solutions and quality materials and insulation could possibly make a big difference to your future home sale.

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