Housing for the Information Age

Housing for the

Information Age

Empowering consumers to drive change in the industry

A Housing Forum Working Group report

This is a report of work by the Housing Forum on the application of information-age digital technologies with the potential to improve the quality and value of housing by harnessing consumer pull. We propose a system of Home Performance Labelling to kick-start the process.

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The supply problem

The dire lack of supply in the market is one of a number of reasons that innovation and response to customer demand has been lacking in the sector. There are others – some external and some within the industry itself. These include:

Market failure

Market forces cannot operate if the market is out of kilter. Put simply, if customers have or feel they have no choice, then the choices they make will not influence the suppliers, who naturally can become complacent in terms of satisfying customer preferences.

Poorly informed customers

Over the years The Housing Forum has noted the absence of readily available benchmarking data and has promoted the idea of arming consumers with more information about the homes they buy through better labelling of the product, specifically to do with energy consumption and space standards. But we have frequently been told that customers do not have the experience to relate such advertised metrics to reality. Our view is simply this: they won't gain the experience until we start the labelling. A related point is the relative absence of comparators to assist in making judgements. However, the rise of on-line estate agents and comparison websites begins to address this issue.

Mortgage valuation methodology

The way surveyors and mortgage lenders value property takes little or no account of space and energy efficiency. Instead, valuations are largely based on the number of bedrooms.

Standards and regulations that constrain diversity

'Housing for the Information Age' follows an earlier Working Group report from 2012, 'Rationalising Regulations for Growth and Innovation', which highlighted the hindrance of overly complex and overlapping regimes of compliance of restricting consumer choice, stifling innovation and acting as a brake on new construction. The Department of Communities and Local Government has published the Housing Standards Review Consultation, which appears to have accepted much of the logic of our Rationalising Regulations report which explained how most standards could be condensed into the Building Regulations. We showed how it would be possible to limit proliferation of standards in the planning system and recommended the introduction of Home Performance Labels to better inform consumers. It is gratifying that after extensive scrutiny of the issues by the DCLG and a specially convened Challenge Panel (including the chairman of our Red Tape Challenge submission group), much of our thinking has re-appeared for consultation.

A planning system that militates against customer choices

Trust has declined in the system of planning approval with the result that local planning authorities demand increasing detail ever earlier in the development cycle. This limits the opportunity for consumers to make choices as so much of the design detail has to be pinned down at the planning stage long before the developer begins attracting consumers.

A disaggregated supply chain

Another barrier to consumers being able make choices to the design of new homes, is that house builders have disaggregated supply chains which make it hard to respond quickly and cost effectively to even relatively simple customisation – unlike say the car industry where many features from the colour of the body work, interior finishes and technical specification are chosen to order by the customer from a selection of standard alternatives.