[+] Build-to-Rent Sector Warming Up to Passivhaus

Australia’s build-to-rent market has skyrocketed in a few short years as rental demand and prices soared. But while developers race to build more apartments , flooding and weather events have sparked mould issues, Covid-19 brought concerns around proper ventilation, and supply chain issues and labour shortages are threatening project timelines and businesses. So, could a German set of sustainable building guidelines be the answer to developers’ project woes? Passivhaus sets out how to design a building to significantly reduce heating and cooling costs, and increase thermal efficiency and comfort. “It is more about building physics,” says Australian Passive House Association chair Kate Nason, who runs courses to help property professionals get trained and certified in passivhaus design. Passivhaus principles include continuous insulation, no thermal bridging, air tightness, mechanical ventilation and heat recovery, and insulation of all components. Integration and consideration of all aspects of every stage is key in passivhaus as a means of designing a building to achieve net zero. Steele Associates director Oliver Steele says passivhaus incorporated into build-to-rent means far lower operating costs. The company’s The Fern at Redfern in Sydney was Australia’s first passivhaus-certified apartments. “Let’s say the developer is going to hold [the property] to develop a whole set and yields the benefit of those savings,” Steele says. “So you only have to convince the developer once that they invest a little bit more upfront, and then their ongoing costs are lower. ▲ Steele Associates' The Fern at Redfern—the first passivhaus apartments built in Australia. “And then if they do sell the building the yield is higher because the annual operating costs are lower.” The Fern was originally built for potential owner-occupiers but was sold and is now short-stay accommodation. Monash University professor Rob Brimblecombe agrees that cost savings are significant, pointing to the university’s student residence Gillies Hall which was designed to passivhaus guidelines by Jackson Clements Burrow Architects. “It effectively uses about a third of the energy compared to the standard,” Brimblecombe says. “We built a bunch of residential colleges at the Clayton campus a couple of years earlier. “So compared to that, it uses much less energy—around two-thirds less.” Passivhaus also has another benefit—reducing landlords’ liability. “If you are a landlord and your tenant had mould in their home, then that’s a real risk and liability,” Brimblecombe says. “You cannot let your tenants live in a mouldy home.” And with recent floods and heavy rains, mould has become such an issue that the National Construction Code has been updated to ensure buildings are better set up to prevent it. “I believe that the new code, that will hopefully be introduced next year, will have air tightness measured in some shape or form, but there’s no target,” Nason said. “And the same with thermal bridging; there’s no kind of minimum requirements—so it means that it’s just not measured.” Nason said air tightness, thermal bridging and well-insulated components worked to reduce mould. “Where passivhaus will assist with minimising mould will be the fact that there’s no thermal bridging in the envelope,” Nason says. ▲ A key principle of passivhaus design is that all components must be well-insulated to prevent thermal bridges. “So there’s no cold spots or condensation created to begin with, therefore you don’t get mould forming behind plasterboard or underneath carpet and the mechanical ventilation system manages humidity inside.” Brimblecombe said Covid and the mould issue has highlighted ‘sick building syndrome’. “Our moment has come, because Covid and virus transmission has put them on the agenda,” Brimblecombe says. “Every single building in Victoria at least had to be assessed. “And then we’ve learned that there is a third La Nina coming— we already had a cold, wet winter. “No one’s seen mould like the way they are at the moment on the eastern seaboard.” Supply-chain concerns and the current insolvency crisis in the construction industry has many volume builders looking at passivhaus with greater interest. Brimblecombe said builders were looking to differentiate themselves and what they could offer, and were keen to be prepared for improved building standards. “Large-volume builders see the opportunity in where build-to-rent and net zero come together ... if you can achieve value on both fronts then the business case stacks up,” Brimblecombe says. ▲ Passivhaus proponents feel their time has come. “Industry-led change is always less painful than government-led change. “And they know that and they want to avoid the pain because they are already feeling a lot of pain.” For developers, it has be financially feasible to take on a passivhaus project but Steele believes it can be done. “This is the key problem with developers developing sustainable buildings or apartments because there’s inevitably a higher capital cost in developing something that is going to have a lower operating cost,” Steele says. “So if developers spend the money and look at various investments on a payback and return on investment basis, I think you also assess comfort in terms of thermal comfort, acoustic comfort and the like, potentially you will get better occupancy rates, less turnover of tenants.” Brimblecombe agrees. “If you extrapolate that model on to a developer, the developer can go to their finance and say, ‘We are really confident as to what the costs to the occupants will be’,” Brimblecombe says. “And therefore, your lending-risk profile for the occupants is lower and in theory, you can get a better rate.” Nason agrees that there is demand. “Around 82 per cent of our membership said that the number of inquiries they were getting is too much of the market to keep up with,” Nason said. ▲ The interest in building with passivhaus principles is ramping up. “And that’s not about builders being too busy—that’s about skill in the market.” Australian Passive House Association chief executive Alexia Lidas says there are opportunities for owner-operators. “In Australia, the majority of the projects are currently single-home residential,” Lidas says. “However, we see a lot of growth opportunities, especially in the owner-operator market. “The top opportunity for growth of passive house by sectors has been identified as single dwelling residential, public and social housing, residential and commercial multi-storey, education, build-to-rent and health. “This aligns with what we have seen internationally.” Nason said it was possible to lessen the financial risk in the development stage of a project. “It’s a higher quality to what is expected in the construction code so you’ve got to look at it in that perspective,” Nason says. “But if you’ve got the right team on board, and you’ve got a builder and a designer who have maybe got a bit of experience and have delivered other projects, then they will know where the efficiencies are.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. 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[+] Build-to-Rent Sector Warming Up to Passivhaus

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