CHAPTER ONE INTRODUCTION
1.1 Davis Langdon LLP was commissioned by the Scottish Government to undertake a research project to establish for a range of typical dwelling types the likely capital and lifecycle cost implications of achieving improvements in EcoHomes and CO 2 emissions performance. This report presents the findings of the research carried out between December 2007 and February 2008 by Davis Langdon LLP, in collaboration with Assist Architects.
Background to the research
1.2 In December 2007, the Scottish Government commissioned Davis Langdon LLP to undertake research to establish, for a range of typical dwelling types, the likely capital and lifecycle cost implications of achieving specified EcoHomes ratings and reductions in CO 2 emissions. The purpose of this was to understand the cost implications for the provision of new social housing of adopting, firstly, the EcoHomes sustainability standard as suggested in consultation on the former Communities Scotland's draft Sustainability Policy 2; and secondly, the recommendations of the Sullivan Report 3 to progressively enhance the energy standards in building regulations. This analysis also supports proposals in the Housing Discussion Document Firm Foundations 4 which call for new houses to be delivered to higher environmental and design standards than in the past. It supports the Scottish Government's Purpose and in particular the Greener Strategic Objective of improving Scotland's natural built environment and the sustainable use and enjoyment of it.
1.3 Sustainable development, including reductions in emissions of carbon dioxide (CO 2), is a policy priority for the Scottish Government. The 2007 revisions to the guidance in the Technical Handbooks should deliver significantly fewer CO 2 emissions from dwellings than the previous energy standards. As international pressure for reductions in greenhouse gas emissions gathers, it is likely that further reductions in CO 2 emissions will be required in the future. The recent Sullivan report proposes a low carbon strategy for Scotland and recommends staged increases in energy standards towards zero carbon buildings, including further reductions in emissions of carbon dioxide from new buildings of 30% in 2010 and 60% in 2013.
1.4 The Scottish Government is able to exert significant influence over the environmental performance of social housing in Scotland through its Housing Association Grant ( HAG) funding approvals system. Its consultative draft Sustainable Development Policy outlines its priorities and action plan across ten themes, one of which is "supporting housing providers to reduce resource consumption through the lifecycle of housing" (Draft Sustainable Development Policy, 2006).
1.5 Housing contributes significantly to CO 2 emissions through both energy consumption in the household and the energy embodied in the building fabric.
1.6 Standard 6.1 of the current Scottish Technical Handbooks, which came into effect in 2007, requires that the energy performance of a building is capable of reducing CO 2 emissions. The associated Technical Handbooks give guidance on energy performance calculations and packages of measures that would meet the standard. This is intended to reduce CO 2 emissions from new housing by an average of 23% beyond the previous standards.
1.7 Scottish Planning Policy on Renewable Energy ( SPP6), which was also introduced in 2007, advises that any developments of 500m 2 or more should be required to include low and zero carbon equipment to reduce carbon emissions by at least a further 15%. For the purposes of this report the SPP6 reductions are assumed to form part of the 30% and 60% CO 2 reduction targets modeled as part of our research.
1.8 Sustainable development means more than just reducing CO 2 emissions. The Scottish building regulations also tackle the issue of social inclusion with guidance that adopts an approach similar to Lifetime Homes. Many other aspects of sustainable development are included in an ongoing review of building standards.
1.9 Communities Scotland (which was abolished on 1st April 2008) consulted on its draft Sustainable Development Policy between December 2006 and March 2007. This included a proposed requirement to meet EcoHomes 'very good' rising to 'excellent'. This research is intended to inform the decision to implement EcoHomes or other enhanced standards in social housing in Scotland funded by the Scottish Government.
1.10 In pursuing sustainable development, developers and landlords need to consider the cost implications for the lifetime of the development. Cost information is important as it aids the decision making process at the design stage of development. A further purpose of this research is to aid the Scottish Government's understanding of the lifetime cost implications of achieving enhanced sustainability standards through the consideration of the lifecycle costs of a range of EcoHomes and CO 2 emissions improvement scenarios.
1.11 Lifecycle costing assesses the total cost of a development over its operating life. As houses are durable assets with considerable maintenance and running costs, calculating the lifecycle cost is important for housing providers to inform financial planning and assessing wider housing investment.
1.12 Building a sustainable and adaptable property with low maintenance costs has dual benefits for the housing association. First, the property will require less maintenance reducing the size of the sinking fund for repairs, and second, it could present savings in running costs for tenants.
1.13 For the Scottish Government's purposes, the lifecycle cost information is needed to inform HAG calculations. Lifecycle cost information is also required in relation to the cost to the tenant and the residual value of the asset.
1.14 This study will be of direct interest to practitioners, architects and policy markers within Scotland and beyond. The following organisations have been represented through an advisory group for the research:
- Scottish Federation of Housing Associations
- Energy Savings Trust
- Chartered Institute of Housing
- Homes for Scotland
- Dundee City Council.
The research brief
1.15 The aims of this research are to establish baseline capital and lifecycle costs for a range of typical social housing dwelling types and then to explore the financial implications of applying either CO 2 reductions or the EcoHomes standard at specific levels.
1.16 The research will establish the lifecycle costs over 30 and 60 years to: the baseline assumptions; to low and zero carbon housing; and the EcoHomes standard at specified levels. The research will seek to establish the cost of applying different standards both in urban and rural locations 5.
1.17 The specific objectives are:
a) To establish a methodology for lifecycle costing for new social housing of various sizes built to 2007 building regulations and planning policy, in urban and rural locations, based on a life of 30 years and 60 years.
b) To establish a baseline cost for new social housing built to 2007 building regulations, planning policy and other relevant standards.
c) To use the baseline data described in (b) and then apply EcoHomes standards: i) Very Good; ii) Excellent; and iii) Excellent but with mandatory energy efficiency, water and waste thresholds.
d) To use the baseline data described in (b) and then apply reductions in CO 2 emissions of 30% and 60%.
e) To establish the impact on the running costs for tenants living in 'baseline' buildings compared with the higher quality buildings described in c) and d).
f) To recommend standard assumptions on lifecycle costs that can be incorporated into Housing Association Grant procedures.
1.18 The lifecycle costs are required to be calculated for a life of 30 years, which is the figure currently used for calculating HAG, and 60 years, which is the time period typically used to represent a notional dwelling life-span.
1.19 Lifecycle costings are required to be expressed in terms of:
- Net Present Value ( NPV) 6 based on appraisal costs over 30 and 60 years; and
- Residual value based on continuing use for social rent beyond these periods.
Equalities statement
1.20 It is a requirement of all Scottish Government funded research that all outputs should be equality proofed. We can confirm that equalities issues have been considered during this research process and that no specific equalities issues have been identified.