We are currently finalising a planning application for eight affordable houses for a large, well known Registered Provider. We are involved due to our experience of delivering modular houses which the RP is really keen to use. We are working closely with the modular supplier to develop the standard house types and architecture to deliver some pretty cool houses.

This week we had a design team meeting and the RP stated that the houses heating, and hot water is to be from gas boilers. Bearing in mind this is the same week as the Government’s announcement of their 10-point Green Plan, including bringing forward to 2023 its rules banning gas boilers in new homes, originally planned for 2025. (note – there is quite a lot of discussion about how the no gas boiler rule can even be controlled or legislated for but for the purposes of this blog let’s say it is somehow implementable).

We were pretty surprised. The RP wants to use modular housing to begin to address all of the sustainability and reliability issues around housing delivery. We work with multiple modular housing providers on a variety of schemes – Ilke, Top Hat, Modularwise, Modulek. We also use MMC methods like timber SIPs (Structurally insulated panels) or magnesium oxide SIPs. One of the many advantages of building homes in a factory environment, or using SIPs, is the additional quality control that can be achieved with lowering the air permeability of a building and increasing the thermal performance. Modular housing, therefore, provides a much more reliable method to reduce carbon emissions than traditional build, and yet the RP wants gas boilers.

Why? Simply put – capital cost versus running costs.

Using a gas boiler for heat and hot water has low capital cost and low running costs but a high carbon footprint.

A comparable (traditional) electric boiler for heating and hot water has a lower carbon footprint than gas and roughly the same capital cost as a gas system but is three to four times as expensive as gas for running costs (which for anyone, especially low-income families is a non-starter).

ASHP’s for the heating and hot water are two to three times more expensive than a gas system but have low running costs and a very low carbon footprint.

So, it seems to me, as a registered provider or any developer, if you have limited capital available and you have to ensure low running costs for your tenants then, unfortunately, the sacrifice is the carbon footprint.

The New London Architecture (NLA) research paper, Zero Carbon London, published earlier this month, found:

The inadequate provision of central government funding, access to green finance and financial incentives has been rated as the second biggest challenge London and the built environment sector is facing. [note – the first is Policy and regulations not fit for purpose]

There is obviously a need to close the gap between the aspirations of how we deliver Net Zero Carbon for all new buildings and the way RP’s are funded. Or we need to find new funding models. Or we need to make savings elsewhere.

One of the big advantages of modular is the significant reductions in on-site programme and therefore prelim costs – could this be used to make up the additional capital cost?

Or what, if any, NZC or innovation funds are available and are they big enough to roll out across a significant housing programme?

Will the book value of the ‘property asset’ increase if they are low carbon, therefore justifying the additional capital expenditure (or vice versa will the lack of low carbon technologies hinder the valuations)?

To be honest, I don’t know but it is an important conversation we all need to be having to meet the 2050 Net Zero Carbon legislation and the Future Homes Standard.

We are aiming to chat about some of this at our Webinar, 26 November 2020, 12.30 -1.30, with Jonathon Martin from London Borough of Waltham Forest, Jenny Kay from GL Hearn and Stuart Smith from Blakeney Leigh.

Please do join us to share your thoughts, you can register here:

https://www.glhearn.com/news-and-views/net-zero-carbon-webinar