Analysis of Project A’s data illuminated the practical context of meeting the requirements of the Code, specifically the reduction of CO2 emissions, for the innovation superstructure and infrastructure. The additional costs of techniques and technologies for achieving CO2 reductions are reflected in a constant thread throughout the semi-structured interview transcripts. The thread links the architect and the contractor, as the organisations specifying and costing the details within the social housing grant regime, to the Homes and Communities Agency and the housing association client.
‘The challenge is on cost grounds, and the more expensive the scheme, the less units you can deliver – so it’s not the technology or the skills or anything like that – it’s the cost involved in doing it’ (Client) ‘I don’t want to give away what our profits are…we have economic performance indicators where we have to take a minimum value per plot profit...this site, being affordable, the level of profit that we’re looking to take is considerably less than a private housing scheme’ (Contractor)
It is generally accepted by innovation superstructure and infrastructure project partners that there are additional costs in the design and build of
126 Code homes compared to those that meet Building Regulations. The extra cost of Code 3 ranges from an estimated £2,500 (HCA) to £6,000 extra per plot (Contractor) using a standard house type with an additional Code 3 package of a solar panel system and increased floor, wall, ceiling and roof insulation. The costs of implementing Code 4 range from an estimated maximum of £7,000 (HCA) to £10,000 (Architect and Contractor), where the contractor uses a standard house type with an additional Code 3 package and a further renewable such as an air source heat pump.
4.7.1 The costs of the Code for the innovation superstructure
The costs of building to Code 4 are borne by the client in a contractual relationship with the building contractor. The original NAHP grant funding for Smith Lane allocated by the HCA to the client in April 2008, is summarised in Table 4.2 (HCA, 2008). Ten further homes within the initial plan, not grant funded, were for ‘open market’ sale.
Table 4.2 NAHP grant funding for Smith Lane
Units £’000 Total Ave. grant per unit £ Rent 20 1,300 65,000 LCHO 23 621 27,000 Total 43 1,921 44,675
However, this allocation was withdrawn (as described in Chapter Three, Section 3.11) and a DCLG press release in December 2009 (after the data collection phase of the case study) noted, in respect of Smith Lane,
‘£3,078,770 will support a development of 51 affordable homes (37 for social rent and 14 for affordable sale) to be built to Code for Sustainable Homes level 4, which meets a need for mixed tenure development of family housing and bungalows. The Borough Council are providing this
127 disused allotment site at nominal value and are strongly supportive of the development since it will help meet affordable housing demand outside of the town centre’ (County Observatory, 2009).
This equates to an average grant allocation per unit of £60,370, in contrast to the case study participants who expressed the cost of achieving Code 4 housing as an addition to a normal build. It is therefore not possible, from available case study data, to identify the cost of building a Code 4 home at Smith Lane.
Applications for grant funding are linked to the costs of development, so that the higher costs associated with Code 4 for which the housing association can apply may be less attractive to the Homes and Communities Agency which has both a limited amount of regional grant funding available and an annual volume of developed homes to be met. This potentially prompts a notion that grant funding may be awarded for volume housing rather than for higher Code levels.
‘...because what we ask for in terms of grant depends upon the cost to us in developing, so if it’s going to cost us more to develop, we’re going to ask for higher grant. Now if my [colleague] decides “I’m not going to bother with the Code” and develop cheaply, they can in turn ask for lower grant to deliver the same housing units, so the Corporation is likely to give them the grant, as opposed to giving it to us’ (Client).
Additional costs for the client are implicit in ongoing maintenance and repair of the range of renewable technologies with contractors who have the appropriate skill base. The level of uncertainty for the client is significant in terms of cyclical maintenance planning. For example,
‘a solar panel costing £3,000 may cost £1,000 to replace in one year because technology has evolved, or £3,000 to repair if it goes wrong’
128 Although there are no direct costs in meeting Code 4 for the local authority housing team, there is a recognition that private sector completions may be reduced because of additional costs and longer construction timescales, thus placing a potential burden on the housing register and the increased cost of temporary accommodation.
4.7.2 The costs of the Code for the Systems Integrator - architect At this early stage of the design process, the architect takes the role of the Systems Integrator as a link between the innovation superstructure and infrastructure as noted in Chapter Three, Section 3.10. For the architect in Project A, the cost of additional professional time to design to Code 4 is absorbed in the fee paid by the client, within which the architect’s profit margin goes down accordingly.
4.7.3 The costs of the Code for the innovation infrastructure
For the contractor, the Smith Lane project represented an opportunity to assess the cost of building to Code 4. There is a recognition that the cost of meeting Code 4 is ‘quite a step change’ as a forerunner to Codes 5 and 6, where costs are unknown and likely to be high.
‘...if we have a standard house with a solar panel for Code 3, to get to Code 4 we can add an air source heat pump...it’s different when you go above Code 4 – you get into silly territory’ (Contractor).
The challenge for Code 4, and then Codes 5 and 6, for the sector is the additional cost rather than the technology or the skills. Potential technologies for Smith Lane include combinations of photovoltaic panels with ground or air source heat pumps. Photovoltaic19 technology is expensive; for example a neighbouring development of 33 flats included
19Photovoltaic (PV) technology (‘solar panels’) captures the energy of the sun and converts it to electricity using PV cells made of semi-conducting material, usually silicon. When light shines on the cell, an electrical field is created across its layers
129 photovoltaic panels costing £10,000 to provide 40% of electricity for communal heating.
‘ ...the mandatory challenge to achieve CO2 reduction is much more
stringent, and you have to find more innovative ways of constructing to achieve those reductions’ (Client).
4.7.4 End user costs
The costs for the end user are expressed in terms of potential savings on heating and lighting bills as a result of their occupation of Code 4 homes. The allocation of social housing is based on need rather than a preference for a particular home in the case study local area authority, so potential residents do not have the option to actively select a Code home (with the possible exception of Choice Based Lettings systems used by some registered landlords.20) Additionally, there is a feeling expressed by both the client and the contractor that occupants may not recognise or appreciate the benefits of ‘Code’ homes, where Code is used as a description. This is seen as jargon which is potentially meaningless, and a summary of headline features in terms of cost savings per annum may be more relevant. Once housed, residents will benefit from lower bills which will vary according to lifestyle and knowledge. Wider benefits for social housing end users are also recognised in terms of the quality of the internal environment’s impact on improving health and well-being, which, for the social landlord may contribute to longer tenancies in more sustainable communities, and fewer arrears both as a result of increased satisfaction with homes, and a greater capacity to pay. For owner- occupiers, the concern of the developer was expressed as the loss of cost savings in repairs.
20 ‘Choice based lettings (CBL)
system ... prospective tenants apply for available vacancies that are advertised, set up in order to give people more choice about where they live’ (NHF, 2010:28).
130