Retrofit vs new build – what should take priority?

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What should take priority – new construction or renovation? It is much easier in some ways for social housing teams to advocate for investments in new construction as a means of achieving decarbonization goals, because at least the likely costs are widely understood.

But what about tenants clamoring for more affordable heating and the other benefits of low-carbon retrofitting – in rural northern areas, in particular, this is a top strategic priority. And nationally, there is no doubt that the energy efficiency of our existing building stock is a bigger and more urgent problem to solve.

Gary Cawley, Director of CPC, offers advice on how to assess options, based on currently available funding streams and the experience of social housing clients in the North working with CPC to achieve their decarbonization goals. .

It is a growing dilemma. How to meet the demand for new low-consumption housing while tackling energy-hungry old housing? What should come first in the public sector resource queue?

The vital role of local authorities and registered providers in tackling the pervasive housing crisis is now compounded by the pursuit of net zero: around 75% of the existing housing stock needs to be renovated to make it carbon neutral. The pressure is overwhelming, especially when you also add the other competing demand for building safety investment.

This is a moral as well as a financial dilemma – dealing with cold and expensive homes to heat versus providing high quality new homes – and my sympathies really go out to those charged with defining the approach. strategic.

But if you’re in that position, maybe sharing some of our experience working and talking with social landlords across the North could help you a bit.

Get to know your stock

Let us first think of the renovation. All social housing providers are at different stages when it comes to tackling this problem. Some have already put their 30-year business plans in place and know their roadmap to 2050, while others – the majority – are not here, or have not even started the process yet.

The first step is always to know your housing stock. It may sound simple, but vendors have different levels of knowledge of what is needed, and it can be difficult depending on your inventory size, age profile, location, and type of tenure. Both internal capacity and digital capacity will need to be considered, so it may be a good idea to seek help from a third party.

Don’t skip this step though. It is impossible to assess the extent of renovation needs or to make the right investment decisions without understanding where your inventory is currently. A thorough audit and assessment of housing needs will therefore be essential.

While some existing parks will have very low EPC values, the vast majority of social housing in the UK is actually at the upper end of D-band or lower end of C-band, so it may be possible that there is not too much work to be done to get them carbon neutral ready.

Consider the available funding sources

A careful consideration of where the money could be raised will certainly help build your 30-year forward plan, as you will need to know how much of the financial burden your own organization will have to bear.

It is fair to say that the government’s available money is better established and more robust for new construction projects rather than renovation.

For example, as in previous years, there is a significant financing fund available for new construction through the Affordable Housing Program, with applications for the period 2021 to 2026 having recently opened, and with tenders program by program. or multi-year strategic partnerships. for longer term developments. In total, £ 7.39 billion is offered by Homes England.

The government is also increasingly unlocking financial incentives for MMC solutions, and for good reason – MMC will make your projects greener, complete faster, and possibly cheaper and delivered on a large scale.

For example, the Affordable Housing Program contains stipulations regarding MMC constructions as part of its strategic partnerships, while there are also incentives contained in the New Homes Bonus program for MMC developments.

In addition, Homes England is leading a project to assess the benefits of developing MMC across the country, while a government MMC working group has also been established for the same purpose.

As we continue to move towards net zero, the government will be sure to step up its support for MMC as we seek more efficient ways to make our homes energy efficient and carbon neutral, so this is a key consideration for social landlords, not just in the future, but for today.

For example, CPC clients are already studying and realizing the benefits of MMC – such as Sheffield City Council, which recently tested a volumetric solution for four new affordable homes for expansion into its future portfolio, and City Council of Middlesbrough, which has built new offices this way for its burgeoning digital economy.

To learn more about how we can help you integrate MMC into your development plans, check out our New Home (NH2) and Modular Buildings (MB1) Offsite Construction Frameworks. Our in-house experts will be present from the start of the process to provide advice and guidance.

Don’t get stuck worrying about tech

What about resources to support modernization?

As we discussed in a previous blog on the Local Authority Delivery Program, although this part of the Green Home Grant has been popular and successfully delivered to date, the funding has fallen short of what we and the rest of the area would love to see. In addition, Chancellor Rishi Sunak gave no indication of future policy regarding the green house subsidy or other sources of funding for the renovation.

The Social Housing Decarbonization Fund is expected to be made available in stages, starting at the end of the year, but again, not enough is known about the details to give the sector real confidence at this time. .

But encouraging rumors are also coming out of the private finance sector, where green products are beginning to emerge for social donors seeking to finance capital expenditure; for example, “sustainability loans”. These products could be available for both home improvement and new construction programs.

However, the destination of modernization funding also raises questions. Naturally, there is some hesitation about installing new technology, for example, especially when it comes to clean heating, and what to adopt at this early stage.

There is a discussion about the potential for hydrogen heating and whether new combi fuel boilers can or should be installed, or if we should now install all-electric heating, given that more renewable sources are now being used in the world. electricity production. There are also concerns about air source heat pumps, whether they can really deliver on their promises as a large-scale solution to replacing gas boilers.

But please don’t let debate get in the way.

All these solutions are likely to have their place in the country’s journey towards modernization. For example, we are already seeing heat pumps installed in new and existing homes across the country, and they are proven to work on a large scale in countries like Norway.

They will require research to find out if they will be suitable for your buildings as they will work better for some homes than others (for example, those that are already off the gas network), but there is a lot of technical advice and assistance available through designated suppliers. to our Energy Efficiency Consulting Framework (N8C) – click here to learn more.

For those who are already in their renovation journey, our framework of energy efficiency measures and associated works (N8) is available, giving you access to a range of pre-approved local suppliers through a suite of 21 measures. energy efficiency, for large or small projects. Click here to read more.

Whichever direction your strategy takes – towards new construction or renovation, or a balance of the two – CPC is there to support social housing providers in the North and Midlands.

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