Fears of thousands in extra insulation costs unfounded, new research finds

Wednesday, 18 September 2024

The H1 insulation standards do not add as much to the cost of building a new home as some say, new research shows.

Improved insulation standards have come under the Government’s cost-cutting radar, but they do not add the thousands of dollars to building costs originally claimed, new research reveals.

Changes to clause H1 of the Building Code, which regulates the energy efficiency of buildings, were introduced in May 2023 and came into force in November.

The upgrades to insulation and glazing requirements were the biggest in over a decade, according to the Ministry of Business, Innovation and Employment (MBIE), and were aimed at reducing the cost of heating a new home by 40%.

But in July, Building and Construction Minister Chris Penk said he had asked MBIE to look at the cost of rolling back the H1 standards.

Building and Construction Minister Chris Penk has talked of rolling back the H1 insulation standards.

Builders regularly raised concerns with him over the standards, which were adding up to $50,000 extra on to the cost of a new home, he said.

The minister’s claims were met with alarm by much of the industry, and the Green Building Council described the minister’s plan as “unbelievably short-sighted” and “a knee-jerk reaction to a few builders’ reckons”.

Now, new research has found the H1 standards add as little as $2200 to the cost of building a new home – rather than the $40,000 to $50,000 extra cited by some.

New Zealand Certified Builders, industry organisation EBOSS, architects Designgroup Stapleton Elliott, and quantity surveying firm YourQS teamed up to calculate what the cost of the standards really were.

The group analysed two real-life standardised plans that will be part of an upcoming NZCB studio range of designs.

To do so, they used the standardised ‘schedule method’, currently the most common method used, and the ‘calculation method’, which is based on the design for a particular building.

YourQS then costed the results, taking into account labour times, materials and subcontractors, and applying a typical cost rate and mark-up for a small to medium residential builder.

NZ Certified Builders chief executive Malcolm Fleming says reverting to outdated insulation standards would be detrimental.

That allowed the group to calculate the cost of insulating the house under the H1 standards compared to the lower standards in force before 2023.

The results showed that if the schedule method was used, H1-compliant insulation added $10,609 to the pre-2023 build costs for the three bedroom, 140m² house plan.

But those additional costs could be reduced to just $2179 over the pre-2023 build cost by using the more sophisticated calculation method.

For the two bedroom, 92m² house plan, the H1 standards would add $11,417 on pre-2023 build costs if the schedule method was used, they found.

But if the calculation method was used, the house would be $1334 cheaper to insulate than under the pre-2023 standards.

Certified Builders chief executive Malcolm Fleming said a reliance on anecdotes and very rough guesses about how much the H1 regulations added to the cost of building had hampered the debate.

He had been vocal in his opposition to the minister’s claims, and the cost analysis provided much-needed hard data to better inform, he said.

Christopher Luxon announcement with Building & Construction Minister Chris Penk

“It confirms the cost impact is considerably less than anecdotal reporting, and that warmer, healthier, cheaper-to-operate homes can be achieved with relatively small cost increases to homeowners.

“It also validates the industry view that using a more sophisticated calculation method rather than a blunt schedule method reduces the cost impact significantly.”

The new standards moved New Zealand closer to standards in comparable countries, and reverting to the outdated ones would be detrimental for the country’s homes, he said.

“Industry manufacturers, such as those in joinery and glass, have also invested heavily in new plant and machinery. What does it say to those businesses when you change regulations and undo much of that investment?”

Fleming said he was pleased to see the building industry largely coming together to push back on the suggestion the H1 standards should be changed.

The research findings have been sent to Minister Penk, who has spearheaded the Government’s campaign against high home building costs, and Housing Minister Chris Bishop, he said.