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10-11-2010

Homestar launch prompts cost concerns

Landlords.co.nz

Property investors have given a lukewarm welcome to the launch of the Homestar property ratings scheme, citing costs and the possibility of compulsory accreditation as problematic.

The scheme is an initiative from the New Zealand building industry and aims to provide a comprehensive home rating system to help kiwis create healthier and more energy efficient homes.

Alex Cutler, CEO of the New Zealand Green Building Council, a Homestar joint venture partner, said the scheme "is expected to have an impact on property values, with a higher star rating providing a competitive edge for some houses on the market."

Martin Evans, president of the New Zealand Property Investors' Federation, was less convinced.

When it comes to rental property he said, "I can't really see tenants taking much notice."

However, Evans did say a higher rating in the present depressed market could prove beneficial as "any edge is important when there's not a lot of demand."

He said the Federation was not opposed to such a rating scheme but does not believe at present that the scheme would result in higher rated properties commanding higher rents.

Instead Evans said he thought the impact would be felt for owners of lower rated property, who would be forced to rent their properties for less.

The Homestar service provides a free online calculator that allows people to ascertain measures they can take to make their homes more energy efficient, though at present apartments are not included in its online calculator.

However, the Homestar Certificate Assessment, which provides a qualified rating for a property, requires validation by a third party.

Evans said the costs of assessment were a concern and that if the scheme became compulsory the Federation would lobby for a system where the trade people conducting any improvement work could also provide accreditation.

The issue of cost and compulsion was also highlighted by Auckland Property Investment Association president David Whitburn.

He said that with property investors already facing increased GST, rate rises in Auckland, Emission Trading Scheme costs and the recent Budget tax changes on depreciation "it's going to be another cost."

He believes the greatest impact will be felt by investors with older properties that would require more work.

On a more positive note for those with properties in better condition he believes the assessment cost would prove to be "relatively cheap" due to the fact higher rated houses could be rented for a higher price.

For those with higher rated property Evans believes the scheme is "definitely a marketing tool" as he says a five-star rated property could command an additional $10 a week over a three-star home.

He also said he believed that under a Labour/Green government the scheme would become compulsory, a view supported by comments from Green Party housing spokesman Gareth Hughes.

"It's a wasted opportunity that the government has not put more resources into investigating a robust mandatory scheme, which would be far more effective at giving consumers the valuable information they want and need when buying or renting a home" Hughes said.

"The market clearly hasn't succeeded in delivering warm healthy homes or rentals in New Zealand, so it's clear that we need mandatory standards."

Source: Landlords.co.nz

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