Coldest homes in the west

Copyright: David Lawson - first published Financial Times November 1995

The Scandinavian banker and American broker were scoring points off each other  at a City of London cocktail party about who knew more about  the UK. Esoteric detail such as the sharpest futures trader, the eccentricities of  a major fund's investment director and the best place to buy fish swung the balance to each side.  But a truce was declared over  the English word every visitor learns first. Not hello or goodbye. Not please or thanks. 'Cold,' they said in unison, breaking into laughter.

It is not leaden skies and draughty streets that brought such rare international agreement. After all, the broker  grew up in the mind-numbing winters of Chicago and the banker learned to ski before he could walk.  'You have the warmest beer and the coldest homes in the Western world,' said the American, only half-joking.

  Desperate efforts have been made to solve at least half that equation. The government regularly uprates  energy efficiency  standards builders must meet for housing. The latest set of building regulations, which ironically came into force during the hottest summer in decades, aims to add another 20 per cent to efficiency through  tougher standards for insulation, glazing and heating appliances. It all seems typically British to outsiders, however. Homes in mainland Europe have been built to these criteria for decades, and American timber-frame buildings traditionally leave UK construction methods cold. Techniques such as super-insulated floors and tight-fitting windows have been tried - and quietly dropped - by big builders  more concerned with keeping costs down to attract buyers.

 One school of thought attributes such low standards in 90 per cent of UK homes to British stoicism. Another points to the cheap fuels enjoyed by a small island rich in coal and then natural gas. Certainly the recent drive to more efficient homes has been driven more from above than by consumers. Housing makes up 30 per cent of the national fuel bill and buildings produce more global-warming CO2 and ozone-depleting materials than vehicle exhausts. It was inevitable after the world summit in Rio that the government would have to lead the way towards  limiting  this damage.

 But efforts have also been made to stimulate consumer interest. Another argument for buyers' apathy is that they have not been able to  easily measure the relative merits of the property they are offered. Every new home now carries a  SAP (Standard Assessment Procedure) rating developed by the Building Research Establishment, which demonstrates energy efficiency and general impact on the environment. 

 Extra pressure to cut costs  has also come from the imposition of VAT on fuel, driven through by the government despite the near-suicidal  risk of rebellion by many of its own supporters.  But relatively little is happening to build on such measures. 'Buyers simply won't pay for the extra savings achieved by going above the government minimum,' says one sceptical volume builder who burned his fingers when experimenting with extra-efficient homes. Buyers swarmed to an inferior, but cheaper, neighbouring  development and he had to cut prices to compete, leaving the builder to meet the extra costs.

  These firms are already building 21st century homes, as the bricks and mortar will be standing for at least the next 100 years  if you consider how much past construction is still in use. They are undoubtedly more efficient than even a decade ago because of rising government standards, but does this reluctance among buyers mean homes will always fall below their potential?   Evidence is emerging that occupiers are beginning to demand higher standards, however. David Holliday, chief executive of Admiral Homes, builds 700 homes a year, all to much higher standards than the minimum, and says he has little problem selling even in the current dull market.

 'We attract people who have made a point of looking at running costs,' he says. They are willing to pay between £1,000 and £4,000 for various levels of extra efficiency on homes averaging £110,000. Two  large 2,600 sq ft homes in a development near Chippenham, Wiltshire, which claim to be the first in the country to hit a perfect 100 SAP score should cost just over £860 a year for electricity and oil - half the outlay on  a home built between 1930 and 1950, says Admiral.  The rest of the development, aimed at scores of 80-plus, will be the focus of a government campaign launched on the site next week[DEC 11] by Construction Minister Robert Jones to encourage other builders to raise their standards.

 Growing public awareness of running costs will help push that campaign from the bottom upwards, says Mr Holliday. He says  that the first two homes in the scheme were sold within a week. Achieving the 100 rating added £3,300 to Admiral's asking  price, but Mr Holliday points out that  this was less than 2 per cent of the total  and  should be recovered through energy saving in just over five years.

  Buyers in general often  remain blind to such costings. Most base their calculations on monthly mortgage costs, which are geared up with every £1,000 on the initial price, according to lenders. 'The new SAP ratings could make a difference, however,' said one building society advisor. Demographic change may also produce a swing to efficiency. The population is ageing, and couples like Tony and Peggy Pugh are moving into retirement homes where warmth is vital. They part-exchanged a bungalow in Huddersfield for a purpose-built flat in Lymington, Hants, and found fuel bills £250 a year lower.

 A milder climate in a smaller home may be one reason, but  McCarthy and Stone, the builder, also attribute use of energy-efficient designs. The more buyers there are in this age bracket, the greater the impact on energy consumption.

  Overall design principles  are unlikely to change much further as we move into the 21st century because of the limited scope left for development of materials and structures, says David Holliday. Perhaps steel frames, which are suited for installing insulation as part of the structure, may come in, but there will be more scope for advances in appliances, which already make up half the energy used in our homes. 'Zoning could be a major benefit, setting heating levels differently for different rooms. That would introduce insulation into interior walls,' he says.

 This may have little impact on shivering visitors to the UK, as the vast majority of homes were built in more masochistic times. They can hope, however, that increasing awareness of  running costs will spill over to the second-hand market, forcing a general uplift in living standards. Perhaps the government  can then turn its attentions to the warm beer.