SME housebuilders and zero carbon – we need actions as well as words

By Andrew Orriss: Head of Business Development (SIG360)

While the debate on how to tackle the UK’s housing crisis rages on, there have been suggestions from a number of quarters that smaller housebuilders could play a significant role in meeting the challenge. As part of his independent review of housing policy, Sir Michael Lyons has proposed an annual target of 200,000 new homes across England. Crucially, he has emphasised that small- and medium-sized developers could prove vital in helping us to achieve these aspirations.

Similarly, a recent report from the Campaign for the Protection of Rural England (CPRE) titled Increasing Diversity in the Housebuilding Sector – published in July 2014 – argued that smaller housebuilders should be empowered through national and local initiatives to build more and better homes. The report cited advantages that smaller companies can offer over their national counterparts, such as the ability to produce locally focused developments and more energy efficient housing.

Working with SME regional housebuilders, the team at SIG360 NewBuild has certainly noted a steady increase in interest over the past few months from smaller companies starting to develop new sites. However, in spite of the support voiced by Sir Michael Lyons and others, current market conditions are making it much more difficult for SME housebuilders to compete with large housebuilders for a greater share of the sector.

We’re now five months into the new Building Regulations, and some smaller housebuilders have had to adapt to the changes much sooner than the rest of the market. Housebuilders with projects that were already on the go before the changes were implemented in April have benefited from a more gradual transition to the new legislation, as they could continue working to the requirements of the previous regulations on those projects; however, many smaller developers that work on a project-by-project basis have had to adapt much more rapidly.

As a result, one of the unforeseen impacts of the changes to Part L has been to put SME housebuilders at something of a disadvantage, as they lead the way in developing projects that conform to the new guidelines and building homes to a higher standard of energy efficiency. This is despite the fact that they’re the very sector of the market that so many are relying on to ease the housing shortfall.

Recognising the challenges that we still face in reaching zero carbon by 2016, the Government announced the introduction of “Allowable Solutions” in the Queen’s Speech in June 2014. This refers to a new mechanism that will permit housebuilders to “buy” off-site measures – such as investing in low carbon electricity generation or retrofitting low-performing buildings in the local community, for example – to off-set the carbon emissions associated with their project.

The scheme is something of a “get-out” from having to meet the energy efficiency levels set out in the Building Regulations. It’s also a mechanism that can only really be used by larger housebuilders, as only they have the necessary resources at their disposal to make these investments. While the Government has stated that small sites will be exempt from requiring an Allowable Solutions scheme, we await further clarity on what exactly this means in practice, including a definition of what constitutes a “small site”.

Moreover, although the Allowable Solutions framework may help to tackle the carbon agenda, it offers very little to protect UK homeowners and businesses against the rising costs of energy and the threat of fuel poverty. It will also come as a blow for those manufacturers and materials suppliers that were gearing up to help housebuilders deliver the notional zero carbon home through fabric efficiency and micro-renewables. Now that developers can get round the demands of Part L, some suppliers may well be left wondering why they bothered to invest in helping their customers meet these requirements.

When they were announced, the amends to Part L placing a greater emphasis on fabric efficiency were welcomed by many of us as a positive move, and one that would help to address the “performance gap” and the associated work of the Zero Carbon Hub. After the new legislation came into effect, the team at SIG360 NewBuild found that demand for our thermal modelling service and advice on dealing with cold bridge junctions increased significantly, demonstrating that housebuilders were taking much greater care over the fabric efficiency of their projects. However, Allowable Solutions will undermine this shift in focus and allow people to continue building pretty much as before.

If the UK is really committed to improving the energy efficiency of its housing stock, we need to concentrate on finding ways to help all developers work towards zero carbon from an even footing and within legislation that firmly supports that goal. Similarly, if we want regional SME housebuilders to play a key role in helping us to build more housing, we need to make sure that the regulations in place can support them in doing that, rather than hindering them. We’re headed in the right direction – but it’s the contradictions in our housebuilding policy that are holding us back from achieving our biggest goals.


Further reading:

One thought on “SME housebuilders and zero carbon – we need actions as well as words

  1. Would you support a limited deregulation policy to stimulate housebuilding by SME’s? Although energy efficiency and carbon reduction must be promoted if the UK are ever going to meet the Construction 2025 targets, a ‘sustainable homes’ policy that hinders housebuilding when demand is exceedingly greater than supply, isn’t actually sustainable.

    Do you think Construction 2025 will still be feasible if the criteria in AD L1A are relaxed for a short period to encourage housebuilders (big and small) to build homes?

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