We must move more quickly to address climate change – but that doesn’t mean ignoring some of the potential knock-on impacts of doing so. Olivia Harris sets out the issues the housing sector and the government must be alive to along the way
The UK hosting of COP26 has brought into sharp focus the issue of climate change and sustainability, and the findings announced by the Intergovernmental Panel on Climate Change (IPCC) have shocked many and created a renewed sense of urgency and overriding need for action to be taken now.
That climate change is happening is beyond dispute. All that matters now is how quickly we can act to slow the rise in global emissions and mitigate against the worst of the already irreversible impacts. While the UK only contributes roughly 1% to global emissions, along with all nations we have a role to play in collectively averting a climate catastrophe.
Such sentiments may seem, at times, far removed by the day-to-day world of affordable housing, but they are not. They are integral to everything we do going forward.
From our asset management strategy for existing homes, to future development opportunities, and the growing need for more affordable homes. Like the whole of the housing sector, and across the built environment world as well, we have a key role to play in not only shaping the government’s response to the climate crisis, but also in implementing it.
That implementation takes many forms. From seeking to ensure that any new development not only meets but also exceeds sustainability regulations, to actively mapping out how we can improve energy efficiency and carbon reduction across our existing homes, both in terms of the fabric of assets and the habits of our residents.
However, this comes at a significant cost, which will increase as requirements become ever more stringent as we accelerate towards carbon neutrality. These costs relate to direct development costs, as well as retrofitting often old and not always readily adaptable buildings.
In addition, retrofitting of measures to improve sustainability have – in the aftermath of the cladding scandal – become something that many leaseholders, residents and landlords have become increasingly wary of.
While cost should not be the driving issue in seeking to tackle climate change, it will become so as we learn the trade-offs that will have to take place to accommodate it.
“Other unintended consequences often manifest themselves in more subtle forms, such as the impact on our residents’ ability to afford their homes in the long term”
These trade-offs include viability-related pressures with developers having increased costs associated with sustainability, which will lead to a reduction in the quantum of new affordable housing. It will also drive decisions around rebuild and densify, retrofit or divest.
It is for this reason that we would call on the government to act to mitigate some of these costs to ensure that in reducing carbon we are not inadvertently reducing the number of affordable homes as an unintended consequence.
Other unintended consequences often manifest themselves in more subtle forms, such as the impact on our residents’ ability to afford their homes in the long term. One such consequence is the additional costs associated with other forms of heating as we make the transition away from individual gas boilers to electric heating or combined heat networks.
While these additional costs may seem marginal, they add a cost of living pressure to residents. Here, along with other landlords, we will closely monitor the impact of such transitions, while remaining committed to the overall objective of improving energy efficiency and carbon reduction.
Perhaps the greatest unintended consequence of tackling climate change through the improved energy efficiency of existing homes is the likely impact of such measures across older homes within the private rented sector.
The requirement on landlords to improve their homes is of course welcome but will leave many landlords facing significant capital costs.
Our concern here is that many private landlords may choose to sell their properties rather than invest in them or will seek to claw that investment back through increased rents. Either way there is the potential to further deplete the amount of available stock within the private rented sector which could broadly be defined as affordable to those on medium incomes.
“Our concern is that many private landlords may choose to sell their properties rather than invest in them or will seek to claw that investment back through increased rents”
This puts further pressure on many of those residents who are struggling to meet their living costs and may be unable to find alternative accommodation within their existing neighbourhood. The solution over the long-term is the provision of more intermediate housing for rent, however, that supply will take time to come forward even if policymakers agreed to accelerate the delivery of it.
So, while we as an organisation remain committed to playing our part in the effort to address climate change and improve the sustainability of the housing sector, we also must be mindful that there will be significant unintended cost consequences. Not insurmountable cost consequences, but ones the government needs to reflect on and consider its response to.
This autumn we not only have COP26 but also the Spending Review. An ideal opportunity, in our opinion, to address these challenges in an integrated way through further support for the sector to assist with the transition and help us achieve our shared ambitions.
Olivia Harris, chief executive, Dolphin Living