Innovation in Housing – the Market for Zero-Carbon Homes

The last decade has seen an explosion in innovation in housing. The types of construction systems that are in use has expanded markedly beyond ‘traditional’ cavity wall construction, and the sophistication of the approaches to insulation, air tightness, cost controls and regulation have all grown in the same period. The drivers for this were mainly national standards and local planning policy, both of which were based on the following knowledge gained in the last decade:

-the understanding that climate change presents an unacceptable level of risk for the planet that must be managed and reduced

-the understanding that making homes more energy efficient helps the customer by reducing their bills

-the knowledge that reducing energy use helps the economy by lessening the need to continually add power stations to the national Grid.

Competitions like AIMC4 and The Carbon Challenge galvanised the more enlightened elements of the industry to come together and to work towards a more effective and dynamic sector that is capable of delivering zero carbon buildings (whatever the definition).

What has been left behind is any recognition that better quality homes ought to deliver better value to the purchaser/tenant and to the constructor/designer. This is what happens in any well functioning market. A better product claims a better price, and sells more because it delivers better value than the competition. This is what has driven growth in every market since markets began to function. But so far we haven’t seen this behaviour in low carbon buildings, which has remained a niche activity when we need it to become mainstream.

In order that the market for zero carbon buildings functions properly we need to tie the value they have to society, to the cost to the purchaser/tenant. Otherwise there will be added costs in the product and no financial benefit to the constructor or designer, both of who will have expended considerable extra effort to develop a better product.

We need to change the way properties are valued when they go to market, the current mechanism ignores the value to society and the value to owners/tenants of low and zero carbon homes and denies the production team the ability to benefit from their efforts. This has to change in order for the market for highly efficient buildings to develop and grow.

The easiest way would be to link stamp duty to CO2 emission rates, in the same way that car tax operates. This would enable house sellers to realise additional profit from selling highly efficient homes and the Treasury could maintain its income by putting up the tax on the worst performing homes at the same time. Everyone would benefit.

Society would benefit by increasing the efficiency of new dwellings and reducing the risk of climate change. New home owners would pay more for their mortgage, but have more cash because of reduced energy bills, and as time goes by, this picture is likely to improve as energy prices rise faster in real terms than the cost of borrowing.

Housebuilders and designers would benefit by competing between themselves for the most cost effective way of delivering highly efficient buildings that attract purchasers, doing what they do best.

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2 thoughts on “Innovation in Housing – the Market for Zero-Carbon Homes

  1. Well said Rory. They do it for cars , don’t they – I pay far less road tax for my efficient little diesel than for an older gasoline guzzler, so why doesnt the same logic apply to property efficiency?

  2. There were the rumblings of a Revolution, but the race for zero carbon seems to have lost its momentum, it is sad to say most of those who aspired to CSH L4 now have their sights only on Building Regs, and the funding which was available had encouraged RP’s to lead the way to deliver the timeline which would have it all sorted by 2016, but the end of funding to build affordable homes have stopped the big leaps we witnessed. But with all Revolutions it will come around again, because something has to be done, but Rory we will all be a bit older than we thought we would be. But the car analogy still works, EPC’s could do what NCAP has done for the automotive industry as a measuring tool, or a simple co-heating test on dwellings could do what exhaust emissions testing has done?

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