The Climate Change Bill 2022, will have significant implications for Australian real estate, once it gets approved by the Senate.
The government’s new climate change legislation, which has been approved by the House of Representatives, will enshrine into law an emissions reduction target of 43% from 2005 levels by 2030 and net zero emissions by 2050.
Real Estate Institute of Australia president Hayden Groves said that while the Climate Change bill does not specifically regulate residential real estate, he expects developers will pay more attention to energy efficiency measures and will also become more transparent about the energy efficiency of their buildings.
“And with that, the government hopes, so too will consumer preference and markets. Already, there is an emerging body of research that shows that homes demonstrating sustainable features currently command a premium.”
Mr Groves also noted that the government had called its emissions reductions targets a “floor, not a ceiling”, which might lead to further sustainability policies or investments in the future.
Within lending there is also growing support for sustainable dwellings in a way. Many lenders are now offering special (reduced) pricing where the security property meets certain energy efficiency criteria. For example, a minimum star rating.
Homes with solar panels and energy storage solutions such as batteries are often viewed by lenders as desirable security. This is because residents who invest in solar panel installation tend to move less frequently and are therefore seen to be more valuable to the lender.
For example, a mortgage holder who has invested in solar panels to be installed on their home are less likely to sell that home in the near term. This means that the lender is more likely to retain that customer for the long term.
So, whilst there is a push to renewables for the sake of the environment, which is terrific, from the lender’s perspective they are also identifying that there is a genuine commercial benefit to targeting customers that are focussed on sustainability. Those customers who invest in sustainability products such as solar panels and battery storage are less likely to sell their home, and more likely to remain a long term customer.