Green building regs

The blunt warning from Linden Homes, the housebuilding division of Galliford Try, is just one of a barrage of policy criticisms submitted last month to a government consultation on new Building Regulations.

The regulations would require higher efficiency standards on new homes from next year and are a step toward the government’s plan to make new homes ‘zero carbon’ from 2016.

Linden Homes, the UK’s fifth-largest residential developer, said the 2016 proposals risk “strangling the building industry with massively increased costs” of up to £30,000 more on each new home.

“The extra costs would make many developments unviable and choke off house-building at a time when the UK’s stalling economy needs it most to provide jobs and tackle the housing crisis,” it said.

They do have a point. If you want to get more of something produced it\’s probably a bad idea to insist that production of those things must cost more.

And that increase in cost is a great deal more than it at first seems. As we know, the majority of the cost of a house in the SE of England is the value of the permit to build one. The actual construction cost is in the £100k region, so we\’re talking about a 20% or more increase in construction cost.

This just ain\’t the way to solve a housing shortage.

17 comments on “Green building regs

  1. Although if they cut the value of the permit it wouldn’t matter so much.

    Our governments lately seem both as suicidal as lemmings and about as smart. What will it take before the penny drops? The housing “crisis” is due to their naive and incompetent meddling. If they stop, the problem will go away.

    This is a needless and expensive solution to a non-problem. Hanging is too good for them all.

  2. The housing crisis didn’t start in May 2010. The Brown/Blair shambles had plenty of time to put into action plans to house the results of their social engineering, but did nothing. I am profoundly sceptical about the whole Green thing, but I can recognise special pleading when I see it. I’d love to see a proper cost analysis from a reputable and impartial quantity surveyor about building a house to the new specs. Brown’s bust and bust recession/slump has seen a drop in the value of land-bank holdings for development companies, refinancing is expensive and for some it must be squeaky bum time. How much of that £30,000 goes on repairing the deficit in company land holdings?

  3. Its not the permit that costs the £100k but the land- which firms bank for years before using any extant planniong permissions.
    The blindingly obvious solution (which has been around for hundreds of years) is to peg land prices with a land value tax which only kicks in when land prices rise (see JS Mill and his Land Tenure Reform Association circa 1870).
    Any increase in the cost of the bricks and mortar and the labour to stick them together will only be a good thing by giving people more employment.It might efen stop waste of electricity : you never know.

  4. This is pretty standard bourgeois-leftism; declare around your Islington dining table that everyone should have “better” something, e.g. better food, and then ban/regulate the cheaper end of the market out of existence. Which is different to old-leftism, which tries to provide everyone with the “better” thing by directly giving them one, e.g. council housing, NHS, schools.

    Which is why the bourgeois-left are the greatest enemies of the Proletariat in our political system. A pox on them, their houses, and their Nigella Lawson gastroporn.

  5. You haven’t thought this through.

    Cost of house = building + land, as you say.

    But if you increase the cost of building, its entirely plausible that the cost of land goes down, as people aren’t prepared to pay any more for the new house. Land doesn’t have any intrinsic value, its only value is scarcity.

  6. William

    Erm, the evidence of the last 20 years or so is that people WILL pay more for the house…..

  7. William, nothing has any intrinsic value, this is not something that is unique to land.

    If as you say, its value comes from its scarcity, then – absent doing something about its scarcity – we are still left with the problem. Stating what the problem is, is not solving the problem.

  8. But if you increase the cost of building, its entirely plausible that the cost of land goes down, as people aren’t prepared to pay any more for the new house. Land doesn’t have any intrinsic value, its only value is scarcity.

    And if the State doubles the price of fuel, all the food producers’ costs will go down so that food stays the same price.

    Or not.

  9. £30,000 is greater than my gas and electricity bills for the last twenty years.

    Given future energy prices, what are reasonable efficiency measures that should be adopted for new builds and at what upfront cost?

  10. I’d have thought that William has a point.

    New build is a minority of housing sales each year, so the market value of houses is largely known from the second-hand market.

    The market value of the “land + planning permission” is therefore largely market value of completed house minus construction cost.

    So if construction cost goes up, I’d expect the market value of land with planning permission to drop.

    OK, if higher costs did mean fewer new builds, then supply drops so the market price of houses, and hence the market value of land with planning permission, could increase. But I wouldn’t expect that to be significant because the main constraint on building is getting planning consent.

  11. Richard

    And what if a large proportion of the land with planning consent happened to be owned already by, say, supermarket chains sitting on their land banks. Or indeed, housebuilders, waiting for the price to rise sufficiently for them to make their profits?

    Since the land is a sunk cost, they should decide to build or not based on the marginal cost of construction versus the market price.

    I see quite a lot of build activity around me at the moment, which suggests that house prices are still higher than the marginal build cost. However, I suspect that not many of these new houses meet the new building regs.

    Slap on another £30k of cost and these developments might well not get completed.

  12. “This just ain’t the way to solve a housing shortage.”

    Clearly the present government has no intention of trying to solve the housing crisis. There is a lot of potential short-term pain from falling house prices, and very little political mileage. Not to mention self-interested MPs (well I never!) safeguarding their own property holdings.

  13. digenes, I thought we’d had the figures here before, that the house builders only had ‘pipeline’ land-banks of about 18 months – very little stuff being sat on long-term.

    Can anyone remember?

    The supermarkets may have longer-term land-banks, but they’re not affected by house building regulation and don’t much affect the housing market.

  14. I think that the 2016 target of ‘zero carbon’ new houses is both unrealistic and impractical in any case – economically or environmentally: it may have made a nice political sound-bite back in 2008 or whenever, but makes no sense in the real world.

    By, say, 2100 there will be a small % houses of this ‘artificially expensive’ standard but still the vast majority -which aren’t going anywhere short of a nuclear holocaust – won’t.

    Revised Building Regulations over the last 25 years or so have successively dramatically enhanced insulation values over houses of the 60’s, let alone pre-war or older, and this agenda should be looked at again to determine cost v. useful gain.

  15. Energy saving measures rarely produce predicted outcomes because people’s behaviour changes.
    Take double glazing & loft insulation which are the most effective. Before DG, it was usual to see houses with net curtains & heavy drapes. Nets actually contributed a great deal to minimising heat loss by trapping a layer of air in front of the glass. It was common to see householders drawing the curtains early in the evening in the colder months.
    As better insulation spread, habits changed. The nets have largely gone & curtaining has become lighter. It’s not unusual to see half the houses in a street with the curtains still open in freezing mid winter. Patterns of behaviour changed. Instead of wearing warmer clothes indoors in the winter it’s clothing more suited to mid summer all year round. And the occupants expect to dress like that throughout the house. Once chilly bedrooms are heated irrespective of whether they’re being used or not.
    The net result is probably an increase in energy consumption.

  16. I am not so sure about zero carbon homes, but I also am a bit sus about the 30k figure.

    The average builder struggles to put one brick on top of another, and until the last 10 years nothing has really changed about the way buildings are made for the last 100 years (I am just talking homes here). Until recently the “major” change was to wack a bit more insulation in the wall, which was a pittance on the overall cost.

    I think this is one area where they won’t become better at building unless they are made to. Too many in the construction industry are in their “comfort zone” knocking up crap homes cus the average punter doesn’t have a clue.

    Maybe not zero carbon, but a great number of energy improvements can be made for little cost impact.

    One of the major impacts of these last round of changes is just having to build to a decent air tight quality. To achieve a certain limit on air changes all you have to do is build to a basic standard (this isnt even a change, old buildings can easily comply, it’s just “build it right) that is simply beyond 50% of the fuckwit cuntards who are builders.

    I work for a company that does various building things, including testing new builds against certain requirements, when it comes to thermal and acoustic testing, we see large numbers of “failures” 99% of which are down to sub 90 IQ builders fucking up.

    (I don’t like builders).

    The construction industry is filled with dinosaurs who know little, that’s the only reason for these large costs.

  17. They say “up to £30,000 more”. They don’t say that the average cost would be anything like that much.

    On the wider point: to a good approximation, the cost of houses currently is determined by how much purchasers can afford to pay. The value of land with planning permission for development is therefore the available purchase price minus construction costs. It follows that if construction costs increase, the value of land will fall. (Unless you’re IanB, and you think land is produced like food.)

    So the question is whether the gain in energy efficiency is worth the loss to holders of development land. I’m not surprised that Linden Homes says that it isn’t.

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