New South Wales is set to delay the introduction of higher energy efficiency standards for new detached homes as the state seeks to provide more time for homeowners and the construction sector to manage the additional upfront costs that are associated with the changes.

But the state is forging ahead with plans to apply the new standards to apartment buildings from the beginning of October as previously planned.

In his latest announcement, NSW Minister for Planning and Public Spaces Paul Scully said that the state would apply special transition arrangements with regard to the planned introduction of higher energy efficiency requirements under the state’s Building Sustainability Index (BASIX) standards which are scheduled to come into force from October 1 this year.

Under these arrangements, homebuyers who sign a building contract for either a new house or duplex before 1 October 2023 will be able to apply to use the current BASIX standards. Up until 30 June 2024, these eligible proponents will be able to generate a BASIX certificate that meets the current standards.

The arrangements will apply to new houses and duplexes only. For apartment buildings, the new energy efficiency standards will apply from October 1 as originally scheduled.

Introduced in 2004, the BASIX system in New South Wales establishes minimum standards that new homes and apartments are required to meet in terms of energy and water consumption across that state.

The latest changes respond to new energy efficiency requirements  for residential buildings that were introduced as part of the 2022 update to the National Construction Code (NCC 2022).

Under the changes, new residential dwellings will need to achieve a thermal performance rating of at least 7 stars under the Nationwide House Energy Rating Scheme (NatHERS).

This represents an increase compared with current standards under which ratings of 5.5 to 6 stars need to be achieved.

The changes also incorporate the introduction of a new whole-of-home energy budget for household energy appliances (consistent with the NCC changes), a new materials index to calculate and report on the embodied emissions for a homes and several other technical amendments (see here for details).

According to the Government’s estimates, the changes will add an initial $7,152 to the upfront cost of a new home.

Nevertheless, the tighter energy requirements will save up to $980 per year on energy bills and will slash overall energy costs by an estimated $9,100 over twelve years.

The tighter standards will also save around 150,000 tonnes of greenhouse gas emissions each year and will deliver homes which are healthier and more comfortable.

However, pressure has been building to delay the introduction of the changes on account of challenges which the housing construction sector has faced in terms of resource availability and cost increases over the past two and a half years (albeit with the rate of cost  growth having eased of late).

These pressures have led to delays in introducing the updated energy efficiency provisions across several other jurisdictions.

In June, the Victorian Government announced that it would delay the introduction of the new requirements until 1 May next year.

Meanwhile, South Australia is not adopting the new requirements until October next year whilst Western Australia is allowing an extended transition period until May 2025.

That leaves Queensland and the ACT as the only jurisdictions outside of New South Wales that have maintained an October 2023 timeframe for the mandatory introduction of the new requirements.

In a statement, Scully said the transitional arrangements in NSW would help to ease the burden associated with the greater upfront cost that is associated with the changes.

“We’re in a housing crisis, but the construction and development industry are doing it tough with ongoing weather delays, rising materials costs, and skill shortages,” Scully said.

“The Government has responded by making new homes where a contract has been signed before 1 October 2023 exempt from increased BASIX standards until 30 June 2024.

“While we remain committed to the introduction of BASIX from 1 October 2023, the transitional arrangements will reduce the financial impact of increased standards on homebuyers who have already signed building contracts under the current BASIX requirements, which includes some 6,000 contracts in Western Sydney alone.

“BASIX standards are critical. They mean housing stock in NSW is built with improved energy efficiency – making housing cooler in summer and warmer in winter with better windows and insulation.

“(But) We also need to keep housing supply moving and these transitional arrangements will take some of the pressure off builders and buyers who want the certainty.”

Building industry lobby groups provided a mixed reaction to the announcement.

Green Building Council of Australia CEO Davina Rooney welcomed the fact that the new standards will commence in October as planned and that no delay has been provided in respect of apartments – albeit with the delay associated with the new transitional arrangements for houses.

Rooney has called for no further delays in the adoption of the higher standards.

“Last year’s commitment from Australia’s Building Ministers to adopt increased energy efficiency requirements for new homes in the National Construction Code was a huge step forward for Australia, and any further delays will have unacceptable impacts,” Rooney said.

“The new energy efficiency requirements will ensure new homes will have features allowing them to be heated and cooled more efficiently, which translates to cheaper energy bills.

“Delaying this any further will have immediate impacts on Australians who want homes that are healthier and cheaper to run, and it will impact on our climate goals.”

Property Council NSW Executive Director Kaite Stevenson broadly agrees.

Whilst acknowledging the pragmatic approach associated with the decision, Stevenson stresses the need for the new standards to be introduced in a timely manner.

“We appreciate the NSW Government’s acknowledgment of the exceptional market conditions and cost pressures facing the home building industry but are concerned that different sectors of the industry will now have varied timeframes to achieve compliance,” Stevenson said.

“While we appreciate the additional time that has been granted to industry and homeowners to prepare for the forthcoming higher standards, it is vital that the sector uses this additional time to get on the front foot to adapt materials and designs so that we can continue making progress towards our 2030 emissions reduction goal.

“The timely implementation of these important changes is critical in reducing transition costs to industry and ensuring that households do not miss out on the benefits and operating cost savings of higher-performing homes.

“We strongly encourage the NSW Government to remain committed to achieving our shared decarbonisation goals and not introduce further delays to the implementation of these important reforms post-2024.”

But developer lobby group Urban Taskforce Australia slammed the decision to exclude apartment complexes from the transitional arrangements.

“Urban Taskforce CEO, Tom Forrest, today welcomed the NSW Government’s announcement today to defer the introduction of new BASIX requirements for stand-alone homes and duplexes until 30 June 2024,” the Urban Taskforce said in a statement.

“The deferral for this class of housing is an important recognition of the supply chain constraints and cost pressures being faced more broadly by the development and construction industry.

“However, we are perplexed over the exclusion of apartments from the transitional arrangements. The changes will add $22,000 to the cost of a typical two-bedroom apartment in Sydney. These costs will be passed onto purchasers. A deferral for all building types would have allowed the supply chain to gear up for the changes.

“The timing of the new BASIX (thermal performance of buildings) is poor to say the least – amidst a housing supply crisis, with ongoing high labour and material costs. The construction industry supply chain is still recovering from COVID, and the construction industry experiencing record levels of bankruptcies.

“The need to support the housing industry underpinned Victoria’s decision early this year to defer the introduction of the new standards until May 1, 2024. Victoria joined South Australia, Western Australia and Tasmania in deferring the implementation of the new standards for all sectors of housing supply. Why not do the same for NSW?

“Urban Taskforce calls on the Government to reconsider the decision to impose the additional requirements on residential apartments from October 1, 2023.”

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