Voluntary home energy ratings won’t drive retrofits for all, but these solutions will

The Australian government recently announced that the energy rating scheme for new homes will be extended to existing homes in mid-2026 in a voluntary capacity, suggesting that this will “inform renters and home buyers upfront about the energy efficiency of a home and how much it will cost to run” and drive low carbon home improvements that cut energy emissions and costs.

Extending home energy ratings to dwellings built before the introduction of the Nationwide Home Energy Rating Scheme (NatHERS) in 2005 is an important step towards raising public awareness of energy efficiency and how the build quality of a dwelling’s envelope and its fixed appliances contribute to energy bills and thermal comfort in the home.

However, our new research points to gaps in the logic of a voluntary ratings system and raises questions about fairness.

Here, we offer recommendations for how initiatives can better address the complex, real-world factors that shape the adoption of low carbon retrofits.

Firstly, home energy ratings that are voluntary neglect the needs of renters and low-income home buyers, entrenching disadvantage.

Landlords and home sellers of more efficient homes may disclose their homes’ ratings in the hope to obtain a premium.

In the current overheated housing and rental market, however, landlords and vendors of inefficient stock have little incentive to rate or improve the performance of their dwellings. Hence, voluntary systems leave renters and buyers who have the least resources and choices  in the dark.

In addition, voluntary ratings systems assume that they are universally understood, become part of normal discussions about homes, particularly at points of sale or lease, and promote voluntary home energy improvements.

Nowhere has this happened, without mandatory enforcement. Moreover, the capabilities of householders to improve the energy performance of their homes are distributed unequally.  

We conducted deep qualitative interviews with 161 Australians about their past and planned home improvements, including undertaking household tours to document how and what people do and plan to do.

Our findings suggest that low-carbon housing improvement policies are at odds with how Australians make renovation decisions.

Voluntary home energy ratings and government discounts on selected low-carbon home improvement technologies assume that householders are rational actors who make calculated, economic decisions in a well-developed market.

In some areas, it was much easier to find quality materials and skilled tradespeople, which led to uneven uptake of modifications across cities and regions.

However, our research found that this assumption does not hold; instead, low-carbon home improvements were shaped by daily routines, household circumstances and local conditions.

Importantly, low-carbon home improvements depend on the physical quality of the home and whether people can access the right independent and trusted advice, the resources, and the services required.

“Freebies”, subsidies and local government bulk-buy schemes helped keep costs down, but unsafe roofs, old ceiling insulation, asbestos and low subsidy amounts restricted modifications.

In some areas, it was much easier to find quality materials and skilled tradespeople, which led to uneven uptake of modifications across cities and regions.

Householders had varied perspectives of how they appreciated their home. Some householders did not see any usefulness in upgrading their older homes and focused on the land value as an investment, depending on the location.

Further, relatively few households have an advanced understanding of the factors that determine the energy performance of a home, and even fewer had the skills and confidence to tackle the relevant improvements.

Mistrust of new products and government programs compounded social disadvantage. Women were sometimes excluded from technical decisions in the home or were reluctant to let tradespersons into their home due to previously unpleasant encounters.

Other households bemoaned the time and effort needed for research, but close relations to energy experts, parents, landlords and neighbours made decision-making easier.

Proactive support through a charity in Melbourne proved effective in reaching and helping vulnerable and low-income groups navigate technical and administrative complexities of energy improvements.

Lastly, householders had varied perspectives of how they appreciated their home. Some householders did not see any usefulness in upgrading their older homes and focused on the land value as an investment, depending on the location.

Others cherished the original features of their – often inherited – homes, valuing history and family memories, and were reluctant to make changes.

Some homeowners focused on home extensions to maximise resale values, while renters lamented about the costs of heating and cooling excessively sized floor plans.

Solar panels were mostly regarded positively and as an investment, yet one householder rejected them for aesthetic reasons.

Plans for major renovations, moving into a new home, and timely information promoted low-carbon modifications, while waiting for financial readiness and long loan periods hindered such activities.

New model

Based on our findings, we developed a new model that more accurately reflects the complex conditions that shape people’s opportunities to achieve low-carbon home improvements.

Our framework can help policymakers and practitioners upscale energy improvements in a more accessible and fair way:

• Australian rental standards are lagging European countries and New Zealand. Requiring rentals to meet more stringent energy-performance standards could protect renters and make efficient homes mainstream.
• As energy improvements are often related to caring for household members, these could be integrated with health and disability services to reach vulnerable population groups for better health and comfort.
• Banks could reward homeowners for energy upgrades with lower mortgage rates, as is common in the US and Europe.
• Public subsidies should be targeted to those with the greatest financial need, such as low-income renters and social housing tenants, in all states to mitigate limited agency and energy poverty.
• Building professionals should be trained in both technical and people skills and offer energy-saving advice and options in all repairs and renovations.
• Training programs targeting women and diverse groups can help close gender gaps, build trust and empower communities.
• There is a need for more comprehensive, independent advice and public education on home energy performance. Voluntary home energy ratings are welcome, but well-located one-stop shops, online tutorials and community groups can make understanding energy efficiency more accessible to all.

Low-carbon, energy-efficient, comfortable and affordable homes should not just be for the few who can afford home energy ratings, subsequent improvements or navigate complex systems.

This research suggests the policymakers who aim to decarbonise the existing housing stock should look beyond simple models of individual behaviour and financial calculations to consider how broader structures, local contexts and timing shape home improvement decisions.

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