The Government has unveiled its anticipated plans to overhaul national insulation laws. It aims to cut the cost of the average new build by up to $15,000.
“I’ve heard clearly from the industry that the current one-size-fits-all approach to insulation requirements is needlessly driving up costs,” Minister for Building and Construction Chris Penk said.
The current schedule approach will be replaced by a ‘whole of house’ approach, where a builder can use online tools to determine the total heat loss and the required insulation. Penk says these changes are common sense.
“The most prescriptive compliance pathway currently available for insulation – known as the Schedule Method – doesn’t allow for design trade-offs that can affect a home’s energy efficiency, like adjusting window size,” the Minister said.
“This has led to designers and homeowners having to over-insulate in certain areas to achieve Building Code compliance, offering little extra energy efficiency benefit at a significant cost.”
The Method will be removed from the Building Code by the end of the year, followed by a year-long transition period.
“Smarter online tools now let us take a balanced, whole-of-home approach to energy efficiency – enabling builders and designers to measure a home’s total heat loss instead of being locked into prescriptive requirements.
“This Government is committed to making common sense changes and cutting construction red tape to make building easier and more affordable – putting more roofs over Kiwi heads, while ensuring those homes stay safe and dry for our families.”
Many builders welcome the new flexibility, saying it allows them to innovate without being penalised by rigid compliance pathways.
However, some insulation manufacturers and green building advocates worry that the changes will result in a decline in standards and long-term energy inefficiency.
The focus on insulation has underlined Penk’s time as Building and Construction Minister. It’s stirred strong opposition from health experts, sustainability advocates, and industry figures.
In July 2024, RNZ reported that Penk was considering rolling back insulation and glazing upgrades introduced by the previous government, changes that were estimated to reduce heating costs by 40% per home.
Documents obtained under the Official Information Act showed MBIE experts warned Penk that the older standards were far behind international norms. Public submissions had overwhelmingly supported the 2023 upgrades.
Still, Penk sided with developers like those he visited in Tauranga, who told him the new standards added $40,000–$50,000 to build costs and were contributing to overheating. MBIE was asked to investigate urgently.
“There are frequent reports of moisture and overheating, increased energy usage, and confusion among designers,” Penk told RNZ. “We can’t let well-intentioned policies become artificial barriers to affordable housing.”
The Public Health Communication Centre warned that lowering standards would result in higher costs in the long term, due to energy loss, poor health outcomes, and increased pressure on the health system.
“There’s 20 years of strong evidence in Aotearoa showing insulation benefits far outweigh the cost,” said Dr Lucy Telfar Barnard. Energy efficiency clauses have proved a political hacky sack. “Rolling back now would be a serious misstep.”
The Passive House Institute New Zealand agreed, calling the previous government’s changes to clause H1 “a step in the right direction” and urging the government to focus on better modelling tools instead of ditching recent progress.
Richard Arkinstall of the Insulation Association of New Zealand noted that insulation makes up just 1.2–1.4% of a home’s build cost but delivers a $4 return for every $1 spent. “It’s a smart investment—for health, productivity, and energy savings,” he said.
Penk has also asked officials to consider designating the Far North as a separate climate zone under the Building Code.
“The Far North District Council made a strong case in its energy-efficiency review submission, highlighting that the region’s warmer climate and need for affordable housing allow for a more tailored approach,” he said.
“I’ve heard from the district council that building costs in the Far North are approaching $5,000 per square metre. They’re pushing for change to deliver more homes for locals at a reasonable price – an ambition I fully support.
“In my view, recognising Northland’s unique climate with a separate zone is a sensible step that could lower costs and unlock much-needed housing supply.”
MBIE will consult on any proposed changes to the region’s climate zone designation before final decisions are made.
“I look forward to hearing feedback from the public,” Penk said.
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