Financial benefits of Homestar 6

Project overview

A residential development project aimed to achieve a Homestar 6 rating, reflecting strong performance in energy efficiency, health, and comfort. The developer explored the financial implications of certification, including build cost increases and potential savings from accessing lower-interest green finance. 

Investment in Homestar certification
To meet the Homestar 6 standard, the project incurred the following additional costs: 

• Build cost increase: 
  2% premium on a $2,500,000 build = $50,000 

• Accreditation & certification fees: 
  Homestar consultants and certification = $10,000 

• Total Additional Costs: $60,000 

Access to lower-interest finance
By achieving Homestar 6, the project qualified for green finance at a reduced interest rate. The financial impact was significant: 

• Loan amount: $2,560,000  

• Interest rate reduction: 1.63% per annum  

• Annual interest savings: $41,728  

• Total savings over 5 years: $208,640 

Net Financial Benefit
Despite the upfront investment of $60,000, the project realised a net saving of $148,640 over five years, purely from reduced interest costs. This is over and above the market benefits of a 6 Homestar rating which include: 

• Promoting the property as being verifiably comfortable all year and not overheating. 

• Improved durability due to minimising internal moisture. 

• Significantly reduced power bills. 

• Opportunity for potential buyers to access lower interest, Healthy Home mortgage rates. 

Key Takeaway for Developers
Investing in Homestar certification not only helps to enhance the environmental and health performance of a building but can also unlock substantial financial benefits through access to green finance. This case demonstrates that savings can far outweigh the initial costs, making Homestar a smart business decision.