Climate change: are housing associations building the wrong homes?

“As a rural provider, we’ve got quite a lot of off-gas properties so we’ve had to be ahead of the curve,” Ms Whinnerah says. One in nine of its homes already has an air source heat pump – one of the leading non-fossil fuel heating technologies.

“If we’re already putting air source heat pumps in a property, it makes sense to do those other things [to bring up the energy efficiency of the home]. For us, there’s no point putting in an air source heat pump in a leaky box – that’s what, if you’re not careful, a standard build can be.”

Another factor for Broadacres is ensuring that the housing association is building up its skills ahead of the Future Homes Standard. Ms Whinnerah says that already it is hard to find contractors with the right skill set, for example to install or service a heat pump. Demand is only going to rise, as policy tightens.

“Nothing which is a standard house builder product will hit our sustainability standard”

Like many landlords, Broadacres is moving away from buying homes from private developers in Section 106 deals. Where it still wants to buy up homes in a particular development, Ms Whinnerah says it is now a decision where Broadacres must weigh up that “we know that in three years’ time, we’ve got to come back and spend £20,000 on retrofitting them”.

Sovereign is another of the landlords that have been completing some EPC Band A homes. Tom Titherington, chief investment and development officer, explains that the 59,600-home landlord has recently completed a technical specification that it is applying to all its stock – both existing and new build, called the Homes and Place Standard.

“When we’re doing our own land-led or working with others, we use that as a basic standard. It’s the basis of our own standard house type,” Mr Titherington explains. “Nothing which is a standard house builder product will hit our sustainability standard. It’s built to 2013 Part L building standards. It doesn’t mean you can’t improve it. We can turn around and say if you did this or that [it would be improved]. Some national house builders are really open to that, and some are less so.”

That does not necessarily mean Sovereign would not buy homes on that development, though – but Mr Titherington says it means that the association goes into the development with its “eyes wide open”, knowing if it is going to have to go back to the property to do more work in the future.

An energy assessor needs to carry out an analysis of the energy and environmental performance of each new home. They use something called the Standard Assessment Procedure (or SAP) to score the home, and depending on that score the home will be given a rating on the A-G scale.

Confusingly, English building regulations do not actually require new homes to hit a specific SAP score or achieve a certain EPC band. This means that the changes coming to English and Welsh building regulations – the Future Homes Standard – cannot be easily translated into homes reaching a certain SAP score or a certain EPC band.

“There’s another calculation that’s about carbon emissions, nothing to do with the cost to the person who’s living there,” notes Richard Lupo of consultancy SHIFT Environment.

The standard in England will from next year require new homes to be 31% lower emissions than current building standards, and a 75% cut by 2025, at which point new homes will also not be able to connect to gas. Scottish proposals would see a 75% cut in emissions by 2030, and all new build homes to be required to use zero carbon heating systems from 2024.

This is particularly significant for social landlords, because some developers will reduce the carbon impact of a particular home by installing an electric heating system, for example, which is lower carbon but more expensive to run for tenants. “If you’ve got low cost you’ve always got low carbon. The reverse isn’t true – you can get low-carbon homes that cost a bundle to operate,” Mr Lupo notes.

The difference in cost for a resident depending on EPC band can be significant. For example, Mr Lupo says that an EPC B home – which is what housing associations are largely building – could see the resident spending about £500 a year on their energy bills.

An EPC A home would be more like £200 a year. The Welsh government’s new mandatory quality standards, which it consulted on last year, call for all new social homes to achieve EPC A. Going back and testing what the energy use is in reality is also crucially important – to make sure that the emissions savings are being achieved, and the costs are reasonable for residents.

“The most important thing is not only designing and building to an EPC A, but checking afterwards that it really is meeting the expected energy [performance],” says Mr Lupo.

He points out that the New Homes Ombudsman could have a part to play in this, although its remit does not at present include environmental or energy performance.

“I think in terms of sustainability scores, EPC and SAP are not particularly good measures and we’re going to move away from those,” he adds. “We’re looking at the construction and the detail of the specification in terms of how the product is going to behave.”

EPCs and the SAP methodology have been widely criticised. The results are based on modelling, which can be inaccurate, and do not have to be tested against actual energy use by the resident.

There is a risk, he says, of just adding technologies and methods to the development process. “You can’t design like that for new build or existing homes, or you get counterproductive or unforeseen consequences, things are too hot, too cold, poorly ventilated. You’ve got to really design it so the home works.”

But not all landlords are building to this standard yet. Inside Housing approached the three biggest builders that delivered no EPC A homes in 2020/21. Metropolitan Thames Valley’s spokesperson tells us: “Last year, all of our completed new build homes obtained an EPC B rating as a minimum, exceeding the government’s target for social housing properties to meet EPC C by 2030. We are working with our contractors and other partners to continually improve the energy efficiency of our homes.”

A spokesperson for Aster Group says: “Some 85% of our homes already have an energy rating of EPC C or higher, well above the average for the sector, and the 1,000-plus homes we plan to deliver this financial year (2021/22) will all be EPC B. This puts us on track to meet the government’s energy efficiency target for social housing five years ahead of schedule.”

All the landlords Inside Housing spoke to acknowledge that building to the highest standards is a trade-off. Spending more per home is likely to mean fewer homes built overall. But Ms Whinnerah at Broadacres notes: “This isn’t really an opt in or opt out – the only choice is opt in. You can be forced in kicking and screaming, or you can embrace it and look at the added value it brings.”

And to set aside enlightened self-interest for a second, she adds: “It’s absolutely the right thing to do, for the customers and on a global scale.”

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