NZ to Scrap Rigid Insulation Rules to Cut Building Costs and Boost Flexibility

In a major move to lower construction expenses and boost housing supply, Building and Construction Minister Chris Penk has announced that the New Zealand Government will eliminate overly rigid insulation rules from the Building Code. The decision, which will see the Schedule Method removed by the end of 2025, is aimed at making compliance more flexible for designers, builders, and homeowners, while still upholding energy efficiency standards.

The reform is part of a broader effort to reduce red tape and streamline the building process, a key element in the Government’s push to improve housing affordability and respond to regional needs—particularly in the Far North, where climate conditions and construction costs differ markedly from the rest of the country.

Why the Change? Industry Pushback Against the Schedule Method

The Schedule Method, currently the most prescriptive compliance pathway for energy efficiency, mandates strict insulation requirements for individual components of a house (such as walls, windows, and roofs), without allowing for trade-offs that reflect the overall design and thermal performance of a home.

"I’ve heard clearly from the industry that the current one-size-fits-all approach to insulation requirements is needlessly driving up costs," said Minister Penk.

For example, under the Schedule Method, designers may be forced to over-insulate certain parts of a house just to offset larger windows—even if the overall building still meets or exceeds energy efficiency benchmarks. This lack of design flexibility can result in thousands of dollars in extra costs for minimal benefit.

New Approach: Smarter Tools, Whole-of-Home Thinking

Instead of enforcing rigid, component-based insulation values, the Government will now promote the use of Calculation and Modelling Methods. These allow a whole-of-home assessment of energy efficiency, enabling designers to balance trade-offs between different elements such as:

• Window size and orientation

• Wall and roof insulation

• Overall heat loss calculations

This more adaptive and performance-based approach has the potential to cut the cost of an average new build by up to $15,000, according to analysis from the Ministry of Business, Innovation and Employment (MBIE).

"Smarter online tools now let us take a balanced, whole-of-home approach," Penk said. "It’s a commonsense shift that will still ensure homes are warm and dry—without forcing builders to spend money where it’s not needed."

Implementation Timeline: Transition Period to Ease the Shift

The Government plans to remove the Schedule Method from the Building Code’s Acceptable Solutions and Verification Methods for Energy Efficiency by the end of 2025. This will be followed by a 12-month transition period to allow industry participants to adapt to the new compliance pathways.

MBIE will work closely with sector stakeholders to support a smooth rollout of the changes. Training, guidance, and updated digital tools will be provided to help the industry navigate the transition effectively.

Focus on the Far North: Tailoring the Code to Regional Needs

In response to local advocacy, the Government is also exploring whether to designate the Far North as a separate climate zone under the Building Code. This could enable more region-specific insulation requirements that reflect Northland’s warmer climate and economic challenges.

Minister Penk acknowledged the case made by the Far North District Council, which highlighted that:

• Building costs in the region are approaching $5,000 per square metre

• Strict insulation rules are pushing up home prices

• A climate-specific approach could unlock affordable housing supply

"Recognising Northland’s unique climate with a separate zone is a sensible step that could lower costs and unlock much-needed housing supply," said Penk.

MBIE will launch a public consultation process before final decisions are made on altering the region’s climate zone classification.

Broader Goals: Cutting Red Tape, Unlocking Housing

The reforms are part of a wider Government strategy to:

• Make building faster and more affordable

• Reduce unnecessary regulatory burdens

• Increase housing supply in high-need regions

• Maintain safe, healthy, and energy-efficient homes

Minister Penk concluded: "This Government is committed to making commonsense changes and cutting construction red tape. We’re making it easier and more affordable to build—while ensuring those homes stay safe and dry for our families."

A Balanced Approach to Building Smarter Homes

By scrapping outdated insulation rules and embracing modern tools that enable holistic energy assessments, the Government is helping homeowners, builders, and designers save money—without compromising on quality. These reforms promise to make new homes more affordable and practical, especially in regions like Northland, where tailored approaches can make a significant impact on housing outcomes.