What could the climate crisis mean for housing associations boards?

The National Housing Federation recently hosted a webinar on what the climate crisis could mean for housing associations and their boards.

Noel Brosnan, Director of Asset Management at Octavia Housing

Noel Brosnan, Director of Asset Management at Octavia Housing

22 August 2019

We were inundated with questions about the topics discussed, so we decided to follow up with one of the guest speakers to answer some of your questions on climate change and the impact it might have on housing.

What are the things we should be thinking about for new development?

One of the concerns raised by Judith Hackitt was that for years new development has focussed on quick turnaround, high profits and low capital costs. The current models meant there was limited responsibility for the building after completion and, as we know, 80% of the cost of a building happens after it’s built. Despite that, properties are handed over to clients to manage and maintain, who at best have had limited involvement in the building process, especially if properties are acquired through Planning Section 106 agreements.

I believe we need to revisit the contracts we use in design to build the right approach. It may deliver some short-term protection on risks, but, as anyone working on the maintenance side of property knows, it does not necessarily protect us from risk after handover.

I also think that the client should have greater involvement in the design process as we need to involve those who will be maintaining the homes at the design stage. As businesses, we need to be more aware of long-term costs and the options available at the design stage that can reduce these costs.

Which country would you say is the best on sustainable housing?

Scandinavian countries, such as Sweden, have made some impressive changes, as have Iceland, Germany and Austria.

Do we need to assess investments in a different way? Is the current way of calculating net present value (NPV) still fit for purpose?

I think so, especially on the more complex buildings being developed in cities. There's a lot of equipment being installed in these homes where life expectancy is uncertain. We've seen an increase in regulations and greater expectations in terms of delivering compliancy. We’ve also seen how the costs of delivering net zero carbon or climate change adaptions have been factored in. I'm reasonably confident that most housing associations can absorb these additional costs but I’m not sure the same can be said for leaseholders and shared owners.

If the Government's (and current Regulator's) expectations are ‘signing up to net zero carbon agenda by 2050’, is that likely to mean new regulation for housing associations?

On 27 June 2019, the UK was the first major economy in the world to pass laws to end its contribution to global warming by 2050. This means bringing all greenhouse gas emissions to net zero by 2050.

Housing contributes around 25% to carbon emissions, so it's inevitable that the Government and its regulators will expect housing associations to do their bit, both in the management of their existing stock and the development of new homes. So, although there are a number of high profile companies and housing associations stating they are signing up to deliver this, I suspect it will become regulatory.

Do you think a hydrogen grid will replace natural gas?

I read that in 20 years, rockets fuelled by hydrogen will take off from the moon heading for Mars. Apparently H2O has been found on the moon, and gravity is lower so less fuel is needed. Well, if this is the ambition for travelling to the stars then there's no reason not to think we'll be using hydrogen instead of gas, unless there's something better round the corner.

I worry about the often untested options being suggested. The problem with many of the initiatives that come forward is that they bring add-on costs which are not fully understood, they require regular maintenance and they have short lifecycles. The trick is to keep it simple.

The National Housing Federation runs regular webinars, hosted by experts from around the sector so keep an eye out for upcoming webinars here.

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