Developers Face Heat Over Misplaced Passivhaus Claims

The marketing brochure promised a building designed to “Passivhaus principles”. The contract specified “Passivhaus-aligned” outcomes. The project name itself invoked the prestigious German standard. But when the time came to prove the building met certification requirements, the documentation didn’t exist. Neither did the independent verification. What may appear as simple marketing language in cases such as this has now become the cause of disputes that could lead to legal action. In short, there are developers discovering that Passivhaus isn’t a spectrum of sustainability features—it’s a qualification that’s either is or is not achieved. That’s according to Australian Passivhaus Association chief executive Alexia Lidas, who had begun to see a pattern of principals from major architecture firms mentioning incorporating Passivhaus into projects, describing one or two sustainability principles with no quality assurance measures or independent verification. “I’d ask them about the project and how they were designing to spec. They’d mention just one of the five principles of Passivhaus but they clearly knew nothing about it,” Lidas tells The Urban Developer . “When I saw more of them putting Passivhaus in their marketing collateral, I realised that, as the guiding body, we needed to put out clearer guidance to make sure consumers and professionals understood what the standard actually requires.” Lidas’s concerns shifted from observation to alarm when certifiers who conducted expert witness work confirmed that the number of disputes in Australian courts over Passivhaus claims were growing. Litigation around airtightness and building performance suggests the legal landscape is shifting towards holding developers accountable for technical claims, Lidas says. “[There has been] nothing too large or out of the ordinary yet but it’s starting to happen more often and could be a sign of things to come.” ▲ Australian Passivhaus Association chief executive Alexia Lidas. In response, the Australian Passivhaus Association has released guidance outlining the legal consequences of misrepresenting projects as meeting the standard, following similar warnings issued by counterpart organisations in the UK and New Zealand. Certification numbers have surged by 86 per cent in the past 12 months, prompting concerns that market misunderstanding could lead to costly disputes. Passivhaus is a comprehensive quality assurance standard for energy-efficient buildings that was developed in Germany during the 1990s. The standard requires projects to meet specific, measurable criteria across heating, cooling, renewable energy and airtightness, verified through construction monitoring and operational testing upon completion. Buildings deliver documented environmental benefits, cost savings and health improvements when properly certified. MODEL founder Rory Hunter, who has two Passivhaus projects under way at Abbotsford, Victoria says the benefits are measurable across multiple metrics. Hunter’s targets are ambitious: all projects will use adaptive reuse or mass timber construction and aim for Passivhaus certification, reducing embodied carbon by at least 50 per cent and operational carbon by up to 75 per cent. “Not only is it cheaper for tenants—they’ll save $1000 a year per apartment [in running costs]—so there’s a cost saving to offset that rental premium but there’s also the health benefits,” Hunter tells The Urban Developer . “The air quality, filtration, acoustics are great. The wellbeing of tenants is really paramount, which drives that higher occupancy.” Residents not only benefit from utilities savings, Hunter says, but also from best-in-class thermal performance and enhanced air quality, which provides more evenly temperate, comfortable homes and reduces exposure to allergens, pollution and pathogens. According to the association’s guidance document, Claiming and Promoting the Passivhaus Standard, only buildings like this that meet all criteria prescribed by the global governing body, the Passivhaus Institute, can legitimately claim Passivhaus status. ▲ MODEL ’ s 17-storey Johnston Street, Abbotsford development serves as proof-of-concept for sustainable build-to-rent approach in Australia. Lidas says marketing materials describing projects as “adhering to Passivhaus principles” or meeting some but not all requirements is misleading conduct under Australian Consumer Law. “The term and its implied understanding is that Passivhaus does have a definition attached to it,” Lidas says. “If you’re going to use the term Passivhaus, the word has a definition that, if it’s used, a project needs to meet the performance and the quality assurance metrics—the two key parts, which people often forget are both equally as important.” Legal firm Speirs Ryan has observed increasing demand for advice on high-performance building projects, according to partner Michael Morrissey, who leads the firm’s construction practice. “It’s crucial for clients to be very clear what the difference is when they are procuring a Passivhaus Standard Project from the outset and for builders and designers to be able to properly understand and engage with the standard,” he says. Certification requires modelling in the Passivhaus Planning Package and verification by an accredited certifier. Projects attempting self-reporting face substantially higher risks of non-compliance and legal exposure. Lidas says there is potential for “astronomically costly mistakes” when project teams attempt to prove Passivhaus compliance in court without proper documentation. Developers may face breach of contract claims if buildings fail to meet promised standards, while misleading and deceptive conduct provisions apply to marketing materials making false certification claims. The international community’s commitment to upholding the standard means enforcement actions could also extend across jurisdictions. The association’s guidance provides a roadmap for legitimate certification, including visual aids connecting project outcomes with legally correct terminology, clarification on quality assurance requirements and advice on accessing local practical assistance. “We noticed a bunch of projects coming out with project names using the term that were not Passivhaus projects whatsoever,” Lidas says. “When we spoke to the companies about it, you could tell they were quite embarrassed and were just really well-meaning professionals who had absolutely no negative intentions whatsoever.” ▲ Source: The Australian Passivhaus Association Achieving Passivhaus Standard requires substantial technical expertise and commitment. Courses involve hours of intensive training, examination study and annual maintenance requirements. Builder qualifications carry similar demands, reflecting the standard’s technical complexity. “There’s at least 30 to 40 hours of hard training without the extra study, plus study for the exam on top of that, plus annual maintenance,” Lidas says. “It’s a really serious commitment and I think people underestimate it.” The association has developed educational programs for property developers and government bodies interested in understanding Passivhaus requirements. And there’s serious interest. A two-month program this year attracted 95 applications for 60 places, with participants including Frasers Property, Development Victoria, Homes Victoria and multiple state housing authorities. Morrissey says that documenting Passivhaus requirements correctly in contracts from the project’s outset “will set the project up for legitimate success”. Without proper contractual documentation, buildings that fail to achieve certification leave developers exposed to claims they haven’t delivered what was promised. Working with accredited certifiers from the outset increases the likelihood of successful certification. Certifiers guide projects through necessary milestones, maintain budget discipline and ensure proper documentation exists to substantiate certification claims. The association has begun monitoring use of the Passivhaus term closely, with enforcement actions possible against misleading claims. Lidas says the organisation makes “no apologies that achieving Passivhaus Standard is not an easy feat” and will “ruthlessly uphold the rigour and reputation” of the certification.

Developers Face Heat Over Misplaced Passivhaus Claims

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