Cost model: Social housing

01 Introduction

Affordable housing in England and Wales is overseen by the Housing Corporation. It part funds new homes and regulates the operation of registered social landlords.

Its 2006-08 budget is almost £4bn, which will support the construction of more than 49,000 homes for rent and 35,000 for affordable sale through the HomeBuy scheme. Most of the balance of funding is provided by financial institutions and, increasingly, the homes are built by developers, either as part of a section 106 agreement or a direct development on behalf of an RSL.

The corporation has driven initiatives related to design quality, environmental standards and procurement. For example, 25% of the dwellings it funds must use modern methods of construction, which has increased take-up for timber-frame and structural insulated panel systems. The corporation has also encouraged sustainable development by establishing minimum Lifetime Homes and EcoHomes standards for projects.

An emerging role for the body is to enable the development of family homes. A large proportion of new affordable homes are apartments, so the development of units aimed at families is an important aspect of social policy.

02 Lifetime Homes and EcoHomes

Lifetime Homes relates to the provision of adaptable and accessible housing. Sixteen design features have been identified that address mobility issues ranging from coping with pushchairs and shopping, to housing those affected by mobility problems and catering for an increasing number of elderly tenants who are less able, but independent.

Under the revised Part M introduced in 2004, many accessibility standards are part of the basic requirements for new dwellings. Access statements are also a required part of planning applications. In addition to these requirements, the Lifetime Homes standard insists on:

• Space planning based on the turning circle of a wheelchair in living, dining and circulation spaces
• Pre-installation of drainage to facilitate the retrofitting of a shower in a ground-floor WC
• The facility through a “reasonable route” to retrofit stairlifts or hoists together with handrails in bathrooms
• The facility to enlarge adjacent car parking spaces to a width of 3300 mm.

EcoHomes

The Housing Corporation is encouraging RSLs to build sustainable homes. Its Scheme Development Standards require developers to achieve a minimum EcoHomes rating of “very good” for projects registered from April 2006.

EcoHomes focuses on reducing the environmental effects of new buildings. These include pollution, energy consumed and materials used. Key elements of the EcoHomes standard include:

•Use of sustainably resourced materials with low environmental impacts

• Use of materials with a high rating in the Green Guide to Specification
• Use of materials obtained from sustainable sources

•Reducing carbon emissions and running costs through increased energy efficiency

• High levels of insulation
• High-efficiency low emission boilers
• Provision for clothes drying
• A-rated appliances

•Reducing water consumption and run-off

• Low-water-use sanitary fittings
• Provision for water recycling

•Reducing pollution

• Reduced car dependency
• Reduction of greenhouse gas emissions
• Encourage home working
• Facilitate recycling

•Access to local facilities and reduced dependency on cars

• Shopping and transport nodes within 1 km
• Provision for secure bicycle storage

•Location

• Reused site of low ecological value
• Good use of building footprint.

As can be seen, the EcoHomes standard addresses social and economic factors, but most of its criteria focus on the reduction of emissions and the environmental impact of the materials specified.

To achieve the “very good” rating, a scheme must contain some elements that contribute to improving environmental performance. This could include material sourced from local or sustainable sources, a specification that contributes to low carbon emissions or extra sound insulation. Accessibility, opportunities for water recycling or space for cycle storage at the site will also have an impact on the “very good” rating.

For an “excellent” rating, the development must show excellent performance across all the EcoHomes criteria listed above.

Increased costs to meet EcoHomes

Since the introduction of Part L 2006, achieving the “very good” standard requires only limited additional expenditure of 2-4%. Compliance can generally be achieved through energy performance measures and the specification of sustainably sourced materials. Additional features such as water butts will increase costs further.

To achieve the “excellent” rating, figures from BRE suggest that costs may increase by 4-7%, depending on the characteristics of the site.

03 Current issues

Project delivery

• Poor project delivery may result in the loss of future funds from the Housing Corporation.
• This encourages greater co-operation with planning authorities to obtain planning permission and to hit scheduled dates for start on site.
• With section 106 agreements, units are usually provided once the site is complete. Because of the developer’s phasing, the RSL may be unable to obtain a date for completion. Overruns may affect an RSL’s plans for the financial year.

Funding

• The corporation bases its funding decisions on value for money, development performance, adherence to design and specification standards and risk assessment. As competition for funding is intense, there is a big incentive to maximise return on the public sector contribution.
• The developer must show it has a robust appraisal for the scheme. A scheme must be deliverable, good value for money and financially viable.
• The corporation will only fund projects that comply with its scheme development standards.

Planning requirements

• Local authority planners continue to seek increased densities in line with PPG3.
• More three-storey dwellings and flats are being developed. Building at a higher density and on brownfield sites can improve a project’s EcoHomes rating.
• A percentage of Lifetime Homes may be specified by planners.

Market forces

• Some RSLs are looking to move away from providing flats at present because of market saturation and the need to provide for a diverse client group.

Renewable energy

• Renewable energy sources receive relatively few points in the EcoHomes assessment. They are unlikely to feature on many affordable housing schemes while costs remain high.

Private developers

• From March 2005, private developers have been eligible to apply for social housing grant in competition with RSLs.
• The Housing Corporation recently agreed to give Persimmon £16.53m to build 930 new homes.
• More private developers are expected to bring their knowledge and land banks to the affordable housing market.

Encouraging whole-life costs

• Assessments include running costs such as energy and water consumption, maintenance and major repair requirements.
• Whole-life cost is a funding criteria, with a target maintenance cost/capital cost ratio of 0.85 based on a life of 100 years.

04 Design and procurement

To improve design and construction quality, the Housing Corporation and English Partnerships have set a target for 25% of developments to use modern methods of construction.

Timber-frame construction is the most common method used as it also contributes towards EcoHomes requirements. It provides excellent insulation and lightweight construction with a shorter programme than traditional methods.

The use of structural insulated panels is increasing. These are rigid insulation boards bonded between plywood or orientated strand boards. SIPs are load-bearing, durable and adaptable. They also offer fast erection, low embodied energy and high insulation standards. Application of timber frame and SIPs still requires a high degree of site works.

Other systems include:

• Modules, but these are more suited to apartment schemes and cannot compete on a cost basis at the simpler and cheaper end of the market.
• Panellised systems, where flat panels are delivered to site and assembled. These can be either open where the structure is carcassed and insulated on-site, or closed panels that are already fabricated and may include windows, doors or services. Panels are framed in timber or lightweight steel, are easy and quick to erect on site and enable early waterproofing.
• Prefabricated kitchen and bathroom modules, which feature the most complex services and finishes in a dwelling.
• Pre-assembled roofs.
• Prefabricated electrical cable looms.
• Thin joint blockwork.

Procurement

Procurement under the Housing Corporation has been an area of considerable innovation, and this is continuing in the repair and maintenance sector with the National Change Agent programme.

Current efforts in new build are focused on concentrating development spend onto a smaller number of developer RSLs with the workload to support investment in the development of a supply chain.

Due to risk transfer and contract administration considerations, most small-scale affordable housing schemes are let on a design-and-build procurement route.

Partnering using the PPC2000 and ECC forms of contract is used on larger schemes where there are opportunities to drive efficiencies into the supply chain.

05 Social housing cost breakdown

The cost model (see next page) is based on a new-build scheme of four two-storey, three-bedroom, semi-detached, 88 m2 houses, and six two-bedroom, 78 m2 houses, with a total gross internal floor area of 820 m2.

The buildings are of a timber-frame construction, with a reinforced insitu concrete ground slab, facing brick external wall and concrete tiles on timber roof trusses. Windows and doors are painted softwood. Internal subdivision is by loadbearing timber stud partitions.

The unit rates are derived from design-and-build lump-sum tenders and are current at second quarter 2006, based on an East Anglia location. The building-only cost of £898/m2 compares with mid-quartile costs collected by the BCIS for new-build timber-framed residential estate housing of £675-970/m2.

The costs exclude enabling works, demolitions, external works and services. The costs of non-fixed furniture and white goods are also omitted, as are professional fees. Unit rates should be adjusted for location, site conditions, programme and procurement route.

Alternative specifications (£/m2 change based on gifa)

• Replace insitu ground slab with beam and block flooring (–11.5)
• Replace timber frame with structural insulated panels (11.5)
• Replace timber frame with traditional construction (24)
• Replace concrete tiles with clay tiles (9)
• Replace loadbearing timber stud with blockwork (–12.75)
• Add radon sump system (12)