Housing

Whitepaper: What challenges are there for the UK trying to meet housing requirements in the present and future?

The UK currently has a pressing need for new homes. However, while it’s crucial to find ways to ensure that there is sufficient stock to meet demand this is no longer the only consideration. The homes that we build and occupy have a big part to play in the environmental impact that the country has. Choices with respect to construction could be fundamental to enabling the UK to achieve green targets that have been set in terms of cutting emissions and producing more energy efficient buildings. As a result, one of the key challenges that government and the construction sector face is how to meet UK housing requirements, today and in the future, in a way that also supports a more environmentally responsible approach to infrastructure.

Why does the UK need so many new homes?

It’s a critical shortage of affordable housing that has created such problems within the UK housing market. The gap at this point in the market is often attributed to the selling off of council houses under Margaret Thatcher’s tenure as Prime Minister and the fact that no government since has been able to replace that affordable stock. In addition, construction volumes of affordable homes tend to be low. Targets for homebuilding in order to rebalance the market come in at around the 200,000 – 340,000 mark annually.

However, it’s not just residential construction that is required but a specific type of residential construction – 90,000 of these new homes would need to be for social rent, 30,000 for immediate affordable rent and a further 25,000 for shared ownership. A range of other issues have also been identified when it comes to the reasons why the UK has such a problem with housing supply, including high numbers of empty or second homes – around 200,000 are left unoccupied for six months across the country.

What specific challenges are there for low-cost housing in the UK?

It is well established that there isn’t enough affordable housing in the UK. Targets for the construction of homes have frequently been missed and, despite repeated policies and goals being set out by government, there still remains a huge gap where high quality, low cost homes should be. There are a number of very specific challenges that have impeded the construction of low-cost UK homes, including:

Poor funding and development

According to one home consultancy, the government will only meet its home building targets if it makes grant funding available for affordable housing, as opposed to relying only on private sales.

A lack of available land

Ownership of land is not the only problem here – it has become clear that there simply isn’t the right infrastructure in place to help create opportunities. For example, a target of releasing government-owned land for 160,000 homes by 2020 is unlikely to be achieved. By the end of 2018, auditors at the National Audit Office said that the government had only released enough land with the capacity for 38,166 homes.

A failure to embrace the vertical build

Where space is a critical issue the only option may be to build up. Cities such as London have very little available floor space and the tighter this becomes the more expensive properties that are constructed on what is available need to be to ensure profit margins. Vertical builds offer an obvious solution to this as more properties can be constructed on a single site.

Ignoring Brownfield sites

A Brownfield site is one that was previously developed but is now derelict and not in use. These areas offer a lot of opportunity as the location for new housing stock – one study identified that around a million new homes could be constructed on Brownfield sites across the UK all of which are currently not in use. This approach would also create a strategy of regeneration in areas that have become rundown, helping to reinvigorate locations that have seen better days.

No support for self-builders

The process of self-building appears opaque and complex to consumers and there isn’t much infrastructure or support for those who are keen to take on such a project. However, self build represents a significant opportunity to help solve problems of housing supply in the UK as long as more support is put in place to make it easy and cost effective to achieve.

Supply and sustainability

In addition to tackling the issues that have been created by a property market that simply doesn’t match income levels in the UK, there is an increasingly burgeoning responsibility to factor climate change into the equation too. Issues of sustainability dominated the discussion in 2019. Climate emergencies were widely declared in locations across the world and Extinction Rebellion, alongside a range of other groups, worked to raise the profile of the problems the world will face if climate change is not forcefully tackled. The foundation of a more sustainable approach is ensuring that greenhouse gas emissions are reduced and climate change targets are met, not just today but into the future too. In 2019, the UK became the first major economy to pass a net zero emissions law, requiring greenhouse gas emissions be reduced to net zero by 2050 – domestic construction has a big role to play in ensuring that happens.

Why are UK homes so relevant to climate change targets?

To sum this up in one statistic, homes in the UK are responsible for around a fifth of the country’s emissions. Most of these emissions are the result of heating and hot water from domestic residences. So, while many environmental campaigners have focused on corporate polluters and the lack of sustainable practices in the business world (which are incredibly important too) often what is missing from the discussion is an acknowledgement that the way we build and use homes in the UK – now and in the future – is going to be around a fifth responsible for whether or not climate change targets are met. So far, efforts to minimise emissions levels have seen some success but what has been increasing significantly is the level of energy use in UK homes. So, what steps have been taken – or identified as necessary – in order to make some impact on these key topics?

The Green Deal Scheme

This scheme was first launched in 2013 with the intention of improving domestic energy efficiency in UK homes. It saw some success but on the whole was hamstrung by the finance element. The Green Deal was structured on the basis of loans that would enable energy saving improvements to be made to existing homes, for example adding in insulation or double-glazing. However, the loans were too expensive and so were not popular with consumers.

Making UK housing fit for the future

A recent report by the Committee on Climate Change called “UK housing: fit for the future?” identified a number of key improvements that could help to make UK homes more energy efficient. This included enforcing building standards to ensure environmental improvements were being retrofitted to existing homes and that new homes were designed to meet key requirements. It also identified the need to fix funding gaps for low carbon heating sources and to introduce preferential finance for those who own energy efficient and low-carbon homes.

A national, deep retrofit

Research by the Institution of Engineering and Technology at Nottingham Trent University identified that a national programme for a one-off deep retrofit of all residential property could be key to ensuring that targets such as 80% cuts in greenhouse gas emissions by 2050 will actually be met. For consumers there would be numerous benefits to this, including lower energy bills and warmer homes. Emissions would also be significantly reduced. However, such a retrofit would come at a cost of £17,000 for a standard house, which is a figure that many find off-putting. Plus, there is currently a lack of infrastructure or intention to put this into place.

A new green standard for homes

The need to balance cost and energy efficiency in new homes to meet national demand has been high up on the agenda for successive governments. The most recent response to this is a new green standard for homes that, it is hoped, will enable the UK to meet climate change targets and also help to improve the energy efficiency of UK housing infrastructure. There are a number of measures that are included in this green standard, including:

  • More stringent building regulations focusing on standards such as overall carbon performance
  • Mandatory energy efficiency requirements
  • Increased ventilation and air tightness levels

The new green standard is now much more than just an idea and the proposed changes in the new green standard for homes could be put into effect as early as 2025. Consultation on the plans will run until January 2020 and then a conclusion on whether the new building standards are practical will be reached.

A 2050-ready home

Many of the issues that have arisen around poor sustainability in domestic construction originate from a lack of information or vision when it comes to what the finished product should actually look like. We urgently need to decarbonise housing stock if we are to meet targets for cuts in greenhouse gas emissions by 2050 but the route to that end result is not always clear. Plus, there is a constant tension between the need to innovative to meet these targets and the cost implications that might have. Strategies such as the Clean Growth Plan have been crucial to focusing environmental and construction minds on the topic and from that has come the vision of a 2050-ready home. The concept of the 2050-ready home is largely the work of the Energy Savings Trust. It has identified three key opportunities that would define such a property and help to ensure that the UK’s domestic housing stock is in the right place to support positive climate action when the time comes.

1. Making use of carbon offset

The way that properties are built today frequently doesn’t start from a perspective of environmental efficiency. Supply chains are not set up to support this and costs can be high. Plus there may be issues relating to location, for example some properties may be difficult to connect to a renewable energy source. As a result, building a home that meets the minimum requirements for emissions can be difficult within reasonable cost effectiveness thresholds.  One solution to this is carbon offset, which allows a house builder to pay to save carbon elsewhere in the country to offset changes that could not be incorporated into this build.

2. Aiming for a zero carbon home

Making changes to the way that properties are designed and built in the UK, primarily around integrating various insulations and renewable energy technologies, is essential for a zero carbon home. This would enable carbon emissions from grid electricity and the natural gas used in heating and lighting to be balanced with clean energy generation.

3. A higher Fabric Energy Efficiency Standard

The Fabric Energy Efficiency Standard is already part of building regulations but for a 2050-ready home the standard would need to be increased. This would likely entail improved energy efficiency and low water use fittings.

What are the costs involved?

The zero carbon standard is effectively the baseline for the approach that is required if the UK is going to meet its climate change requirements by 2050. The cost of building different types of homes to this standard comes in at roughly:

  • £6,700-7,500 for a detached home
  • £3,700-4,700 for a semi detached property
  • £2,200-2,400 for a low rise flat

The financial expense, especially that which is born by developers, is often where the focus sits when it comes to quantifying cost. However, there is a serious environmental cost to consider in this context too. If the UK meets even some of its house building goals – for example in constructing 200,000 new homes a year – and these are not built to a zero carbon standard the consequences could be troubling. 200,000 new homes a year would emit around 43m tonnes of avoidable carbon dioxide emissions up to 2050, which would significantly impact on the country’s ability to meet those all important targets. It’s also worth bearing in mind that there are some major financial benefits when it comes to making UK homes more environmentally sound. The government’s proposal of a new green standard for homes, for example, would deliver benefits worth around £11 billion overall.

Who should bear the cost of balancing housing need and climate considerations?

This is an issue that has been examined particularly closely in the context of the new green standard for homes proposed by the government. While this scheme could create benefits of around £11 billion it would also cost £10 billion over a period of 70 years. This cost would largely fall to the construction industry. An impact assessment of the proposals identified that the initial capital costs for implementing the plans would be on the shoulders of developers. It also found that there is not much motivation in the sector to embrace this type of approach given that “split incentives mean that developers have little reason to build better performing buildings.” However, although these initial costs would fall to developers they could eventually be passed on to landowners. And any ongoing maintenance or replacement costs relating to these properties would be solely the responsibility of the building owner.

Is there actually the potential for change?

The need to embrace a dual perspective in terms of meeting the UK’s housing needs while also adhering to its climate change targets is becoming increasingly urgent. Impact assessments on measures such as the new green standard for homes identify that obstacles, including a lack of government support, have held back real vision and collaboration on this issue. However, change is possible – and may become a necessity – as the global climate situation continues to deteriorate.

When it comes to the challenge of meeting the needs of the UK housing market many of the historic issues – a lack of land and funding, for example – remain. The environment, and the need to make changes to ensure that the UK meets its climate change obligations (such as the targets for the 2050 deadline) is one topic. This needs to be tackled in parallel with construction-specific issues to ensure that the residential property market can make a positive contribution to both the climate and the British standard of living in the near future. Whatever is taken forward as a solution needs to achieve the right balance of cost and energy efficiency when it comes to meeting national housing demand.

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