The Australian government recently released a consultation Regulatory Impact Statement (RIS) on Residential Building Mandatory Disclosure (RBMD) which, if legislated, will require all existing sellers and/or landlords to provide information to prospective buyers and tenants about the energy and water performance of the home.
This disclosure requirement has been in place in the ACT since 1999 and was recently introduced in Queensland. In 2008, the government released a study that identified the effect energy efficiency ratings have on house prices and it was determined that if the energy performance of a house improves by one star, on average, its market value will increase by about three per cent (Department of Sustainability, Environment, Water, Population and Communities, 2008)
The aim will be to better inform the marketplace about the quality and efficiency of the properties that people are buying or renting.
The introduction of RBMD legislation is also seen as a major catalyst for increasing efficiencies in existing residential housing stock (approximately 98 per cent of homes in Australia). This will also help bring existing buildings closer to the efficiencies of new homes, which are being built to six star energy efficiencies and beyond.
In light of these changes, there is an increasing need to engage and train the real estate industry in sustainability concepts for housing. Many design features, new environmentally sustainable technologies, renewable energy solutions and water management measures are not fully understood or promoted by agents.
The question of whether real estate agents are ready for RBMD was the subject of research conducted by Green Gurus in collaboration with the Curtin University Sustainability Policy Institute in Western Australia, and with support from the Real Estate Institute of Western Australia.
Today, information provided to consumers at point of sale or lease provides little detail on aspects of the home that may determine its high or low quality performance (in energy, water and greenhouse issues) but which can lead to adverse selection in the marketplace.
Energy and water costs are rising to meet the cost of supply, and households are looking for ways to ‘future proof’ their homes from these costs. A prudent real estate professional will be wise to prepare and gain knowledge of sustainability features so that they can better service the needs of their clients.
Since May 2010, a number of sustainability workshops have been delivered to real estate professionals in Western Australia.
Many workshop participants have recognised the benefits for householders from receiving this information – including lower electricity, gas and water bills – with the seller achieving the potential of a ‘green premium’.
Real estate professionals provided detailed feedback after the workshops which highlighted the opportunities and concerns from RBMD.
Most agents found it would be a strong way to differentiate them from their competitors. They also believed it could add value to relevant properties, and help them build a ‘green’ corporate image. Being an early adopter could also give them an edge over competitors, some added.
However, real estate participants expressed a number of concerns, many of which were based on the uncertainty the RBMD will have on their business practice and on the selling process.
Of paramount importance to agents was that the process must not delay or otherwise adversely affect the selling or leasing process.
Feedback has already been taken by the government, and the new rules are expected to come into effect in 2012/2013.
By: Chiara Pacifici, Sustainability training co-ordinator and home sustainability assessor, Green Gurus