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Mandatory Disclosure for Residential Property

Here at Resicert we like to keep our eye open for news about real estate and property and I thought I'd share this news article about the government's upcoming mandatory disclosure scheme with you. When this scheme comes into place the owners of houses, flats or apartments will be required to provide energy, greenhouse and water performance information about the home at the time it is offered for sale or lease.

Access to this information about environmental performance will allow buyers and renters to better compare different properties. The scheme will also allow and encourage environmental performance to be factored into property promotion and provide an additional stimulus for smarter design, construction and renovation.

Mandatory disclosure is already in place for commercial office buildings over a certain size, and it is expected that mandatory disclosure of residential buildings will be phased in during the not too distant future.

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Mandatory disclosure – now for the residential sector, but will it work?
By Dick Clarke past president and fellow of the Building Design Association NSW

Mandatory disclosure of thermal performance and/or energy consumption is slowly but surely being implemented across the nation. The commercial property sector has been coming to grips with the issue for several years, but is the residential sector going to be up to speed, and when are the various state administrations finally get their acts together and implement it for houses and units?

The Council of Australian Governments (COAG) was the instigating forum for residential mandatory disclosure, and so far as it is concerned, the ball is now in the states’ courts for implementation, but only for Class 1 buildings. It has been a slow train coming: the ACT introduced it in 1997, and many of us cheered, expecting the other jurisdictions to follow within a couple of years. But sometimes the rate of change can be very slow, especially when industry heavyweights who drive their businesses using the rear view mirror instead of the windscreen are involved.

In its basic form the scheme will require vendors to disclose the thermal performance of the building envelope at time of sale, and perhaps leasing. Other indicators of environmental performance, like water efficiency, have been flagged as well, and some have been incorporated into Queensland’s now-operational “Sustainability Declaration”, but in other states these hover between uncertain and unlikely.

Questions remain about how the schemes will be administered, and after the debacles of the green loans scheme and the highly subsidised home insulation program, nobody is rushing ahead with half-baked plans.

Queensland’s scheme is a simple two page web form, which any homeowner can fill in. It is therefore simplistic, and its results notional. This is ok, if it is a transition from nothing to something more accurate, much like NSW’s ground-breaking Energy Smart Homes Policy was a transition from nothing toward the current computer simulation analysis of thermal performance used in BASIX.

Further questions remain about how Class 2 buildings will be administered, and there appears to be a bit of duck shoving going on between Canberra and the states at present.

States like NSW, which now have a longer history of ratings in new dwellings and renovations, do not need soft beginnings. Communities in NSW and Victoria are largely aware of the way of ratings work, and of their value in marketing. Whether real estate agents are as aware remains to be seen – evidence suggests a lot of work is needed among residential agents to bring them up to the knowledge level of their commercial colleagues.

Most importantly, if a scheme is to be meaningful, it must have an accurate assessment methodology. In the commercial sector, NABERS with its underlying ratings system the Australian Building Greenhouse Rating has a high level of veracity, and the industry willingly embraces the relatively minor costs associated with the rating process (Green Star’s costs are not so universally accepted, but that is another story).

A similar level of veracity is needed in the residential sector. The use of computer simulations is the best method, and this requires a pool of skilled assessors, with an administration that insulates them effectively from commercial pressure to doctor the numbers in favour of the vendor/client.

The role of government in this cannot be over emphasised, yet so often we see governments – especially NSW – ducking for cover in anything that requires good governance and a bit of investment.

The economic benefits of a science-based and verifiable scheme are obvious. Some properties which rate very badly will be candidates for knock-rebuilds (and here’s hoping NSW lifts its current four-ish star equivalent in BASIX as its minimum standard to at least meet the rest of Australia’s six star standard for new houses), under the National house energy rating system or NatHERS

Others will have meaningful renovations that improve their passive solar performance, rather than shallow cosmetic makeovers. The benefits to the home owner/vendor is a better return in the market, and the future owner/occupier benefits from lower running costs. The design and construction industry benefits not just from the work, but from the driver of doing better quality work. And the nation benefits from lowered greenhouse emissions.

The sustainability sector of the property industry must be more vocal in its demands that governments do their jobs, if the ultimate goal of mandatory disclosure is to be achieved.

Dick Clarke is director –  sustainability,  Master of Sustainable Futures, UTS, an accredited building designer and Past President and Fellow of BDA NSW

Courtesy of http://www.thefifthestate.com.au/archives/20743

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