Building standards were updated in 2023 to make new houses more energy efficient and save owners an estimated 40 percent on energy bills. Photo: 123RF
Building and Construction Minister Chris Penk has welcomed new research finding the added cost of insulating homes under new standards was just a small fraction of the $40,000-50,000 he cited when he asked officials to roll back the rules.
The research found costs could be low as $2179 extra for better insulation of a three-bedroom house built in Auckland or Tauranga, if the requirements were factored in during the design phase.
Penk said he expected government officials to take the study into account as part of their review of how much higher insulation standards were adding to the cost of building houses.
Building standards were updated in 2023 to make new houses more energy efficient and save owners an estimated 40 percent on energy bills.
But earlier this year, after hearing from builders and developers that the higher standards were adding up to $50,000 per build, Penk instructed officials at the Ministry for Business Innovation and Employment (MBIE) that he was "keen to move forward" with returning the energy efficiency standards to their previous levels.
Before 2023, the standards had not been updated for more than a decade.
The latest calculations were produced by architectural website EBOSS and New Zealand Certified Builders, with input from architects at Designgroup Stapleton Elliott and quantity surveying firm YourQS.
They calculated the added costs for building two real-life home designs complying with the 2023 standards, versus complying with the old standards, including labour and materials. They found costs were much lower when the architects and designers worked out heat loss from the whole building to see whether the design as a whole complied with the rules, rather than treating each part of the building separately.
Costs were much higher when they simply copied the minimum insulation values for each individual part of a house (windows, walls, roof) and put it all together in a house - currently the most common method of meeting the standards.
Using the costlier method, compliant insulation added $10,609 to pre-2023 build costs for the three-bedroom 140m² house plan, but that could be reduced to $2179 using the cheaper method.
The report also analysed a two-bedroom 92m² house, and found increased insulation standards would add $11,417 on pre-2023 build costs using the blunter and costlier method. Using the cheaper method would actually make the smaller home $1,334 cheaper to insulate than under the pre-2023 standards, with better insulation and health benefits from a drier and warmer house.
"In our view, the debate about the costs of [the 2023 standards] has been hampered by a reliance on anecdotes and very rough guesses about how much these regulations add to the cost of building," said Malcolm Fleming, New Zealand Certified Builders chief executive, in a statement released with the findings.
"If the wider industry was to adopt this approach, then we don't see the need for the government to roll back the standards, or make the new standards optional," said EBOSS head Matthew Duder.
Chris Penk Photo: RNZ / Samuel Rillstone
According to correspondence released to RNZ under the Official Information Act, government experts told Penk earlier this year that the pre-2023 standards were "significantly lower" than other countries with similar climates, including relevant parts of Australia, the UK, Ireland, and the US.
They told him the upgrades had overwhelming support from the public and the building sector when they were brought in, and reduced heating requirements in a new, four-bedroom home by up to 40 percent.
Penk asked them to go ahead anyway with work on reducing the standards, and officials confirmed they were doing so urgently, the emails showed.
MBIE has since confirmed to RNZ that the design of the standards was not a ministerial decision, however, it said it was not unusual for government priorities to factor into decisions on standards such as this.
After RNZ reported on the emails, Penk said Cabinet had not made any decisions on the requirements, but he had instructed MBIE to look into the real-world impacts of the changes.
Penk said on Tuesday the increase in building costs in New Zealand since 2019 was not acceptable.
"The review, which is currently underway, is all about getting to the bottom of these issues and establishing a sound evidence base to inform policy decisions. We want to ensure that the new standards do not add unreasonable costs onto the price of a home and that the health and efficiency gains are balanced against affordability."
'Largely anecdotal stories'
Asked about the process, University of Otago law professor Andrew Geddis said that although ministers could not directly roll back insulation standards, there was nothing to stop MBIE's chief executive from rolling them back himself if he agreed that the minister had a point.
Andrew Geddis. Photo: RNZ / Cole Eastham-Farrelly
However, Geddis said there was a notable difference in the processes followed in 2021 when setting the new standards, compared with the process of potentially rolling them back in 2024.
In 2021 MBIE reported receiving more than 700 submissions totalling 3000 responses and more than 600 pages of feedback when it designed the standards, which it said at the time was "more than the previous five years of Building Code consultation responses combined".
More than 98 percent of responses supported increases over the previous standards in the shortest time possible, MBIE said.
"Compare that to the largely anecdotal stories minister Penk seems to have relied on as a basis for wanting to roll the new standards back," Geddis said.
"Irrespective of any legal niceties, this seems like a pretty poor sort of policy development process. And were the chief executive to now roll back the requirements, it might leave those involved in the industry wondering what is the point of engaging in future consultations."