Can government procurement transform residential design and delivery?

When we consider the role of government in influencing the design and delivery of residential property, it is generally regulations like the National Construction Code that springs to mind. But quite aside from regulation, there is another powerful lever available that can incentivise sustainability – money.

Federal and State governments have already shown the way their procurement can transform a market through mandates around energy-efficiency performance for leased commercial office space.

When a heavyweight tenant like a federal government agency will only sign on the line for a 4.5 Star NABERS space, developers become eager to comply.

It is time for the federal government to take a similar approach to its incentivising of build-to-rent (BTR), and the planned $10 billion Housing Australia Future Fund for affordable and social housing.

Both of these measures could be quite reasonably tied to requirements for project proponents to commit to embedding best practice sustainability.

Given it is public money on the table, ensuring the resulting dwellings do not contribute to the escalation of climate change and are also designed for maximum resilience is in the public’s best interest.

Data shows that residential buildings currently consume nearly 25% of all grid energy in Australia. And the hotter the climate gets, this demand will only increase unless more housing is designed that has high passive thermal performance through a fabric-first approach and highly energy efficient all-electric heating, hot water and appliances.

The Trajectory for Low Energy Buildings should signal to the wider industry that residential design and delivery is being told to lift its game. The National Construction Code has now made 7 Star NatHERS the minimum for compliance, and there are preparations underway for NatHERS to be expanded to existing dwellings and for disclosure of energy performance to be required at point of sale.

Given this context, there is a clear role for the Federal Government to tie all publicly-funded incentives and financing to better than minimum outcomes so the properties that result are going to hold their value in a market where energy ratings are going to matter – to valuers, to financial institutions, to occupants and to potential future purchasers.

There is already a precedent from some of the State and Territory governments. The Victorian Government has mandated 5 Star Green Star Buildings for all its Homes Victoria “Big Build” public housing developments. Their design specification requires efficient all-electric buildings, with upfront carbon reduction and specific design requirements to minimise overheating.

Procurement power is also especially important when it comes to materials and supply chain, and here again Victoria is showing leadership with a Circular Economy and Recycled First Policy, and with social procurement strategies that support Indigenous businesses, localised supply chains, enterprises that employ people with disability.

Development WA, the Western Australian Government agency, has aimed to transform the local development industry through the use of Green Star Communities for masterplanned estates delivered with private development partners. In the ACT, from late 2023 gas will no longer being connected to any new development, and by 2045 the ACT plans to switch off its gas reticulation network.

The Federal Government could set some similar conditions, for example:

• 7.5 or 8 Star NatHERS as the minimum energy performance standard
• Building fabric and building envelope design that addresses thermal bridging and ensures airtightness
• All-electric – no gas connection
• Renewable energy generation on all developments
• EV charging infrastructure as standard
  
  

“But what about the cost?”

The most common objection to any suggestion of improving the quality and sustainability of residential buildings is cost. But it comes down to tradeoffs. Expensive showpiece items such as stone benchtops or imported bathroom tiles, additional powder rooms or ensuites all add to cost. A gas connection and gas pipework, adds to cost.

By contrast, careful design considering orientation, building massing and the extent of glazing can be cost-neutral (or even saving) and embed high quality outcomes into the ‘bones’ of the building. Spending a little bit extra on double-glazed, thermally broken windows; external shading systems and internalising thermal mass, can then double-down on those benefits and drive long term benefit for health, wealth and wellness of occupants.

Assurance of those benefits in delivery is critically important, as the best design in the world will flop if not delivered on site. Relatively straightforward assurance activities include:

• As-installed quality inspections of insulation to ensure continuity
• Whole-dwelling pressure testing during and after construction to improve building sealing.

We also need to keep in mind that those most in need of affordable housing are those most affected by the cost of energy. That is where the real burden of cost falls most heavily.

And are we building what is genuinely needed?

The other area where we would ideally see government purchasing power make a difference is ensuring that the housing types that are most needed are being delivered.

Much of the high profile BTR product currently being planned is one and two bedroom apartments designed for fully-abled persons with no children and high incomes that can afford relatively high rents. This is not housing for people working as baristas or cleaners, or for families with children, or for people with disabilities or for older women on low or fixed incomes.

Yet these are the people who are most under-served by the current private rental market. There is a lot of discourse around ‘housing choice’ but insufficient evidence of diversity in the choices available in areas within reasonable distance of employment, schooling and healthcare.

To address the need for housing, BTR must design and deliver the dwellings that suit those that need it. That means some homes will have enough bedrooms for families, and sufficient living spaces for family life.

There needs to be thought given to universal design for disability accessibility, flexible spaces for working from home, and common areas that support building community resilience through connecting people. This can be achieved through sharing economy features like tool libraries, share cars and co-working spaces, and communal gardens for the benefit of both microclimate modulation and growing fresh food.

It would also be fair for the government to specify affordability requirements and arrangements for rent-capping where public funds are supporting private sector BTR.

Ultimately, the property industry needs to show it can deliver genuine, long-term value, for the public support it gains. Governments can help, through making better practice a condition of any incentives they provide.

This article was originally published at Sourceable