Fresh of the heels of a new Building Act and amendments to raise the standards for timber treatment, weather tightness details and a raft of other things that make building new houses and renovating them more expensive, they want more!

CO² emissions and energy efficiency will suddenly become important.  So get ready to add more to your budgets for new renovation / building projects.  Double glazed windows, more expensive building wraps and insulation is looking likely.

What’s happening

The Department of Building and Housing has released a discussion document proposing changes to the Building Code (see www.dbh.govt.nz) that will impact property investors. These include changes to make houses more energy efficient, minimising CO² emissions from houses and introducing new performance standards for houses. Unfortunately this will further increase the cost of constructing new homes, adding thousands to new building prices.
From a technical perspective, the current New Zealand Building Code is the First Schedule to the Building Regulations 1992. It comprises 35 clauses containing technical requirements and two clauses of general provisions.

The Building Act 2004 sets out the law on building work. Building work means work for the construction, alteration, demolition or removal of a building. All building work – both the design and construction of new buildings and the upgrading of existing buildings – must comply with the Building Code. ‘Buildings’ include housing, community facilities, commercial and industrial structures, outbuildings and structures such as bridges, platforms and dams.

The current Building Code sets out performance standards that buildings must meet, for example, it specifies how strong an earthquake a building must be able to withstand, or how much natural light there should be in a bedroom. It covers aspects of buildings such as fire safety, access, moisture control, durability, services and facilities. The Building Code is performance-based and has been since 1992.

My thoughts

Similarly to what I told NZ property Magazine, some of the changes such as temperature settings on hot water cylinders to prevent scalding and earthquake proofing, are common sense.  However whilst it may be “nice” to have buildings a little bit warmer and producing less of a carbon footprint – I can’t help but see Massive problems and further unwanted cost increases.

There will be extra costs for architects and engineers to draft for the energy performance and technical changes to make building tougher, as well as for council to police these – ie. more council fees, again!  In addition there will be more costs to construct these.

These extra costs will stop some investors, developers, and/or builders from going ahead with their projects, and will dilute returns.  Therefore these costs will be passed onto tenants in many cases through increased rents to hit desired return levels, and having projects not go ahead will broadly speaking mean less supply, same demand – so UPWard price pressure.

Try building a new house in a remote town like Mataura of 85sqm.  That building will likely cost you minimum of $110K in the cheapest nastiest compliant cladding excluding council and development professional fees.  Yet existing 85sqm houses on similar sized sections you can already buy for less than $110K including the land!  This is hardly going to encourage new buildings to cater for the population influx NZ is expecting.  In addition house relocations are going to be significantly tougher and more expensive if this code is approved and enacted.

Not what the Government is aiming for in terms of addressing the “Affordability Crisis”, and making life easier for the first home buyer.  But that is the cost of buying votes from the Green Party to secure a majority Government.  I really don’t like MMP.

SUBMIT NOW – time to have your say

I am submitting for FUZO (www.fuzo.co.nz), myself and leading a strong panel from the Auckland property Investors’ association.  I have contacted the Minister’s office and got much information from them, in addition to that on their www.dbh.govt.nz website.

I recommend that you go to http://www.dbh.govt.nz/bcr-2007-consultation and read at least the summaries for yourself.  Then decide on how these will impact you and submit for yourself on these points that Interest you.

Do nothing and the Government can then say their were not many submissions against this, so we are totally justified in costing you another 3-5% more for every house you build, and much more than that every renovation you do.  Enough is enough – and if this isn’t the last straw for you after the introduction of development contributions by local government, the introduction of the Building Act 2004, changes to compliance documents of the building code, councils making more inspections and much tougher, charging for wastewater, now they are looking at CO² emissions and energy performance when many houses have been standing prior to World War II.

So – use the links to DBH and make your voice heard.