Submitted by Mark Farmer, EC Harris, Head of Private Residential
Since the recently announced changes to UK Building Regulations, everyone is asking the question “what is the future direction of travel towards ‘zero carbon’ in 2016?”
I recently attended the Building magazine’s roundtable event to discuss this very issue with developers and housebuilders. We currently stand at a major crossroads for the industry, with the government's new zero carbon definition likely to be announced early in 2011. This crossroad currently represents one of the biggest opportunities for the government to listen to the development industry. The government must recognise that the current Code for Sustainable Homes (CfSH) zero carbon definition at level 6, which is due to be implemented in 2016, will seriously impair commercial viability, housing delivery quantum and is indeed still questionable in terms of whether the standards can be physically achieved.
We at EC Harris have modelled CfSH level 4 compliance, which is due to become mandatory in 2013, at a cost premium of c£4,500 per unit over the former 2006 Building Regulation levels or £3,000 more than the new 2010 Part L standards. It is likely that this premium will reduce in the next 3 years through innovation etc but beyond that point, the transition to zero carbon faces a 'step point' in additional costs. The cost uplifts beyond Code level 4 are exponential, especially for smaller sites that do not lend themselves to major renewable energy solutions. It is vital to address the issue of the significant potential cost of on site renewable energy source options to achieve the highest level of the code - these could create extra over costs from current levels of more than £30,000 per unit!
If costs of construction increase through instruments such as the CfSH, without any route to increasing sales values (which is the current dilemma in trying to sell 'green' residential units), then either developers have to reduce their margins or land values will fall, both of which will reduce development. In addition, developers will be unable to continue to fund affordable housing delivery, which is even more critical in a time when the government's ability to subsidise social housing is reducing in real terms.
Further information on the latest changes to the CfSH and the current consultation on zero carbon definition are found at the links below:-