Benefits and costs of aiming higher

This Issue This is a part of the Aiming higher feature

By - , Build 159

Pay-back periods vary when adding features to make houses perform better. It’s useful for new-home buyers to know what to expect in terms of money in their pockets when installing elements above Building Code minimums.

THERE ARE net benefits from including a whole range of features above Building Code minimums in new houses. These benefits cover aspects such as increased comfort and convenience, as well as monetary benefits.

Financial pros of aiming higher

Recent BRANZ research investigated the monetary benefits to owners when they include features above Building Code minimums in their new house. There are a wide range of features available, but this research analysed:

  • enhanced thermal insulation
  • solar water heating and power panels
  • rainwater tanks
  • efficient lights
  • user-friendly design.

Cost-effectiveness varies for features

Table 1 shows the results as the pay-back period – the number of years of savings required to cover the cost of the enhancement. Generally, a pay-back period under 16 years is considered cost-effective.

Enhanced thermal insulation

In cooler parts of New Zealand, extra roof insulation and floor slab insulation is economic. The cost is additional to the current minimum requirements of the schedule method in the insulation standard NZS 4218:2009 Thermal insulation – Housing and small buildings.

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Solar power

Solar water heating and solar electricity have quite long pay-back periods. The latter assumes no battery storage, so there needs to be daytime usage of the power.

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Rainwater tanks

Rainwater tanks, which are mandatory in some areas for new houses, also have quite long pay-back periods. Larger tanks have better economics but can be difficult to fit in most new housing sites. Rainwater is for toilet flushing, outdoor use and possibly washing of clothes. Owners directly benefit where there is meter charging.

Elsewhere, there are area-wide benefits that accrue to society at large. If most houses installed tanks, council rates could be slightly lower due to less capacity required of the water supply system.

Other water-saving devices include flow restrictors and dual-flush toilets. The former cost very little to install, and the latter are largely standard practice in new houses.

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Efficient lights

New LED lights are becoming cheaper and use significantly less power than standard incandescent bulbs. The pay-back period is very short, particularly for lights used for long hours.

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User-friendly design

The final feature, user-friendly design, is a characteristic of sustainable houses and enables occupants of all ages to easily move about and access all areas of the house.

Features include better front door access, wider doors and passageways, improved power socket positioning, switches and handles, and strengthened walls for subsequent fitting of grab rails and mechanised seats on stairways.

Table 1 Costs and benefits of above-minimum measures in new houses
  COST OF MEASURE OR EXTRA COSTS ABOVE CODEPAY-BACK PERIOD
Insulation(1)      
  Roof R4, lower North Island(2) $300 7–17 years
  Slab footing, lower North Island(2) $800 6–15 years
  Roof R5, lower South Island(2) $800 7–20 years
  Whole slab, lower South Island(2) $1,500 4–13 years
Solar water heating(3)   $5,000 10–12 years
Solar electricity generation(4)   $10,000 11–13 years
Rainwater tanks (5,000 litre)(5)   $3,500 10–15 years
Water-saving devices(6)   Minimal Immediate
Energy-efficient lights (LEDs and CFLs)(7)   $8–20 each 0.5–1.5 years
User-friendly design   $3,000–$7,500 N/A

Based on 150 m2 single-storey house (excluding garage). Electricity is 0.18 c/kWh with heat pump and 0.27 c/kWh for other uses.

Notes:

  1. Insulation pay-back period depends on the heating regime. Periods for morning/evening-only heating and 24-hour heating are shown.
  2. Lower North Island is Taupo south. Lower South Island is Christchurch south.
  3. Solar water heating pay-back period is shown down to Christchurch and below Christchurch.
  4. Solar electricity generation pay-back period is for Christchurch northward and below Christchurch. Power generated is assumed to be all used during the day, i.e. no batteries.
  5. For areas with water meter charging. Cost includes a pump, electrics and plumbing.
  6. Water-saving devices include low-flow showerheads and tap flow restrictors.
  7. Savings assume 3 hours per day average use.

A user-friendly design need not look institutional, and generally they appear spacious. These houses also have resale advantages, and building in these features at initial construction is considerably cheaper than a subsequent retrofit.

Understanding pay-back periods

Pay-back periods of 15 years imply a rate of return of about 5% per year, which is about the minimum most people would find acceptable. Many owners will not stay in their new house that long and hence often want shorter pay-back periods.

They may not recover their extra costs in reduced operation costs. However, at house sale time, a higher-performing house is a selling point, and any extra premium achieved will likely offset any extra initial expenditure.

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For more

See BRANZ Study Report SR346 The value of sustainability – costs and benefits of sustainability and resilience features in new houses at www.branz.co.nz/study_reports.

Download the PDF

Articles are correct at the time of publication but may have since become outdated.

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