A thought-provoking conference
Last week we were fortunate enough to be able to attend Elmhurst Energy’s 30th Anniversary Conference in Leicester. This was an important conference for Elmhurst, as it comes following the announcement of their merger with Stroma and at a time when the wider property industry, including surveying firms such as SDL, have taken increased interest in the Energy Assessment sector, anticipating increased reliance on these from consumers and lenders.
Disappointing lack of urgency
A topic which has been on our minds and that of our lender clients for some time now are the Minimum Energy Efficiency Standards (MEES). Although not initially covered by speaker Keeran Jugdoyal (representing the Department for Levelling Up, Housing and Communities “DLUHC”), post session questions lead to the disappointing (from an environmental perspective at least) confirmation that moving the minimum EPC standard to a C or D rating is merely an aspiration, with no workable framework or legislation forthcoming anytime soon.
Given that any change would require a period of consultation and implementation, it is doubtful we will see any movement on this by 2025, as had been originally suggested. Our suspicion is that given the potential political implications of implementing this requirement, it is likely something which will be left until the next election cycle.
Despite the absence of action on the part of the government, the cost-of-living crisis, green mortgages, and other drivers might see both residential homeowners and buy to let investors voluntarily exploring retrofit improvements as there is now a growing financial incentive to do so.
On that point at least, the speaker was positive about the prospect of further support although whether that will be limited to an education piece or more funding schemes is yet to be seen. Equally he made a strong case for how the EPC will only grow in importance, not only for consumers but also for the government in the drive towards Net Zero. With that growing reliance there is of course need for the EPC to evolve to remain fit for purpose.
RdSAP 10 – change on the horizon
According to a recent National Trading Standards report, 64% of homeowners are currently making their home more energy efficient or considering doing so. This figure is likely to increase when the government releases guidelines on how and when Landlords initially, and then homeowners, will need to upgrade the EPC rating of their property. The EPC will be relied upon like never before. Ensuring it is fit for purpose is essential. With that in mind a long-awaited upgrade to RdSAP it set to be rolled out later this year.
The EPC rating is driven by fuel prices set in the SAP system. These are only updated when there is a change to the building regulations. At present EPC ratings are calculated using historical fuel prices taken from December 2014. Needless to say, fuel prices have changed significantly since this period. The new release of RdSAP 10 will incorporate fuel prices using the most recent data.
Changes to RdSAP conventions were also announced. RdSAP 10 Improves the accuracy of calculated heat loss in respect ‘room in the roofs’ allowing the assessor to stipulate whether the room has a party wall, sheltered wall, is connected to another building part, or is exposed. The latter is the current default setting of RdSAP.
A welcome change is the new option to enter an ‘alternative floor’. This will remove the need to divide a building part into extensions where there is more than one floor type. This should save the assessor some time on site. Perhaps less welcome, will be the new requirement to measure each window. RdSAP 10 focuses more closely on heat loss via windows, and this will require further data collection in respect of size, type and orientation.
Further changes were announced such as an option to select whether a property has fixed shutters to windows. A new PCDF button for Mechanical Ventilation systems will be introduced. PV diverters and batteries will be enterable into the system. Finally, as more people consider air or ground source heat pumps as a cleaner alternative to gas boilers (if not necessarily cheaper), expect recommendations for their installation to become more common in EPCs.
Retrofit is a big project we NEED to succeed
As surveyors we are naturally cautious of retrofitting an existing property to improve its energy performance; whether this be a concern that additional insulation might cause unintended condensation and damp problems, or of the cost and disruption of providing modern technology which may not yield a particularly favourable return on investment.
We were treated to some excellent expertise on the topic of Retrofit from David Glew of the Leeds Sustainability Institute whose research looks at the benefit of various forms of retrofit technology. His data was clear; to achieve Net Zero by 2050 we need to transition to electricity as a primary means of heating and cooking.
However, our growing energy demand (growing population, electric cars etc.) means that simply electrifying buildings with technology such as heat pumps is not viable. This is because there will be a significant gap between the energy we can produce and the demand. It is therefore essential that there is a huge effort to insulate on a larger scale to reduce demand to a sustainable level.
With much of the UK’s housing stock the “easy wins” such as double glazing, modern boilers, and loft insulation have already been completed. This is what makes the implementation of a C rating for MEES challenging. The research shows that to achieve the savings needed to meet a Net Zero policy, wall insulation will be essential. This will be a significant and disruptive change for many homes.
The homes of the future
The UK government’s drive towards Zero Carbon housing has led to recent changes in Part L of the Building Regulations with further changes to be introduced under the Future Homes Standard in 2025. This standard will require that all new homes emit 75% less CO2 than Part L, 2013. New homes will need to be Zero Carbon ready without the need for retrofit works following grid decarbonisation. Say goodbye to gas boilers, your new home will not be connected to a mains gas supply.
Part Z of the building regulations introduces the regulation of Embodied carbon. In recent years much of the focus in carbon reduction has targeted ‘Operational Carbon’. Operational Carbon is the amount of carbon emitted during the operational phase of a building i.e., the powering, heating and cooling of your home. In contrast, Embodied carbon refers to the emissions arising from the manufacturing, transportation, installation, maintenance and disposal of building materials.
Interestingly, emissions from Embodied Carbon currently exceed that of the UK shipping and aviation industry combined, yet despite this, these emissions are currently unregulated. Part Z would require larger developers to declare the Operational and Embodied Carbon rating for every new building constructed from 2025 onward. In 2027 the government will impose limits on these emissions.
This poses a significant challenge to developers who will need to revise their construction methods to meet the new standards. Last year students at the SDL Surveying Academy travelled to Manchester to visit the Barratt ‘Zed House’. The ‘Zed House’ project is a concept home developed in conjunction with Salford University. The house is constructed using MMC with walls formed by way of highly insulated closed panels. The house incorporates the latest technology in respect of internal services. The aim of the project was to demonstrate what a Zero Carbon house might look like, whilst ensuring that the construction of such homes will be sustainable economically over mass volume.
The Zed house utilises the latest services technology from more well-known systems such as air source heat pumps and photovoltaic cells, to emerging technologies such as infrared heating and Vehicle-to-grid (V2G) systems which allow power generated to be stored and shared efficiently between your home and electric vehicle. These services are managed smartly by Artificial Intelligence and Barratts estimate that the cost to run the Zed House will be approximately £350 annually.
This dual approach of improving the fabric of buildings and harnessing the latest services technology will enable developers to meet the proposed new standards. However, this will inevitably add to build costs. Barratts have attempted to balance some of these costs by exploring ways of deskilling the build process. For example, the panellised walls of the Zed House were built ‘off site’ removing the need for skilled labour. The factory-made roof was assembled on site on the ground and craned into position, removing the need for scaffolding. Barratt Homes claim to have halved the build time by adopting these methods.
The supply chain remains a challenge to developers with a shortage of air source heat pumps and mechanical ventilation manufacturers. Added to this problem there is a shortage of skilled labour. Currently in the UK there is one air source heat pump contractor for every eight gas engineers.
It is therefore inevitable that build cost will increase significantly, and developers may seek recoup these costs through higher asking prices. The question for the likes of Barratt Homes is “will the public see the value of such technology and accept a higher price tag?”
By Adam Santos, MRIC, Senior Regional Surveyor at SDL Surveying & Adrian Drummond, MRICS, Assistant training and Quality Care Manager at SDL Surveying