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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Kick starting the cycle of improvement

We are advocating a range of measures to kick start a continuous improvement process that will revolutionise the housing market, its products and its services. Our tools for change - actions and policy changes that will be needed to bring this about - are described below, beginning with the simplest and most straightforward tool and rising to the more complex.

Introduce labelling where homes are advertised for sale or rent

It's the job of regulation to set minimum performance requirements. But improved performance above this baseline should be driven by the market. We believe this can be achieved by providing better information to consumers that encourages higher performance through 'customer pull'. This is best achieved through a 'systemised labelling' of building performance developed by industry and facilitated by an independent standards authority so that it is applied universally by suppliers and agents.

These Home Performance Labels would be based on the EU Directive on the Energy Performance of Buildings which came into effect from 9 Jan 2013. An energy performance certificate (EPC) must be provided whenever a property is constructed, rented out or sold. All sales or lettings advertisements in the commercial media should show the EPC rating of the property being advertised. At the moment, there is no requirement to display the full certificate but where there is adequate space, the advertisement should show the A-G graph.

Given the statutory requirement to produce this information, it offers potential to extend this to include other information at the point of sale or rent on building performance with clear and simple metrics to 'nudge' consumers into making informed choices. The key performance measures that would be useful to consumers are those with a cost impact. These are:

  • – Space - gross internal area (m2)
  • – Energy performance – fabric efficiency (kWh/m2/yr) and/or energy demand target (kWh/m2/yr)

Later on, these could be expanded to include:

  • – Accessibility (general, mobility, wheelchair)
  • – Water efficiency (l/pp/d)

Providing this information in a standard format enables consumers to benchmark products against baseline requirements, best practice and other industry criteria. It also allows them to make market comparisons on the costs of purchasing or running the home, so driving housebuilders to deliver higher levels of performance in order to match consumer expectations and to achieve market differentiation.

Home Performance Labelling promises much more

We argue the Governments should go further with the concept of Space Labelling than the current consultation on the Housing Standards Review. Labelling is not merely an alternative to minimum standards for private sale homes as the DCLG consultation might imply. The concept of Home Performance Labels which we propose promises to be the beginning of a revolution in consumer driven quality, value and performance of both new and existing housing of all tenures.

Provide fiscal incentives
to reward energy efficiency

A report published in July 2013, "Retrofit Incentives" from the UK Green Building Council has highlighted how fiscal measures can be used to incentivise retrofit. The measures suggested in the report included using Stamp Duty Land Tax or variable rates of Council Tax. These are designed to reward the purchaser of more sustainable homes. The same measures will work to improve the quality of new buildings as they would also benefit from lower taxation at the point of sale, or during occupation. This will be seen as an additional benefit of new homes to buyers, particularly those who prefer to buy existing homes rather than newly-built ones. By comparing the energy efficiency of existing homes with new ones a strong signal will be sent to the market that newly-built homes have much to offer in terms of lower utility bills.

Bring labelling into the
mortgage valuation methodology

The RICS Residential Mortgage Valuation Specification ('The Red Book') provides the most specific guidance on carrying out a mortgage valuation specification and the latest edition due to be published in November 2013, includes a section that recognises the importance of sustainability in valuation.

When a residential valuer considers overall desirability in carrying out a residential valuation this would include factors such as sustainability through property comparable evidence. The range of issues includes key environmental risks, such as flooding, energy efficiency and climate, as well as matters of design, configuration, accessibility, legislation, management and fiscal considerations.

The Housing Forum believes that labelling will advance the extent to which valuation will arrive at an informed view on the likelihood of sustainable factors impacting on value, i.e. how a well-informed purchaser would take account of them in making decision as to offer price. We therefore propose a joint working group of The Housing Forum, RICS and Building Society Association to advance labelling as a part of the valuation methodology.

We also plan to submit evidence to a new independent Commission looking at the challenges facing the UK valuation profession chaired by former MP and Complaints Commissioner for ICE Futures and ICE Clearing, Dr Oonagh McDonald CBE.

Licence JD Power style consumer feedback ratings for housing and house builders

Having established appropriate Home Performance labels as a basic mechanism for improving consumer awareness of housing quality, a longer term enhancement would be to franchise a consumer oriented quality rating system for new homes - like JD Power, which collates customer satisfaction research on quality and reliability and customer experience and publishes rankings in the US for house builders.

This is a role for an independent body, outside Government, capable of reflecting the interests of consumers and other stakeholders. The NHBC, the independent standards raising and home warranty body, already carries out the National New Homes Customer Satisfaction Survey, which surveys homeowners at 2 months and 9 months after occupation. The survey covers virtually all the larger house builders and many smaller builders. The Home Builders Federation uses the results to award star ratings for its members for customer satisfaction. The survey could form the basis for the Home Performance Label and this could be achieved at no cost to Government.

Create an industry standard to drive uptake of Building Information Modelling in the supply chain

There has been much discussion in the construction industry about the use of Building Information Modelling (BIM) and how it will help increase efficiency and reduce costs of construction. Building Information Modelling (BIM) is the process of generating and managing data about the building, during its life cycle - from design via construction to occupation and ultimately to demolition and recycling. The idea is that everyone in the supply chain has access to vital information, not just three dimensional geometric data but information of all kinds – cost, weight, energy performance, availability and so on. It's not surprising, bearing the potential in mind, that 75% of construction professionals in the UK agree that BIM is the future, according to the "National BIM Survey 2013" published by NBS.

It has, however, yet to make an impact on the house-building sector.

Many involved in the sector are not aware of it, and most of those who have engaged with it so far don't see how it can benefit them in their daily work. And there is much to learn from other sectors on how the relevant technology can be adopted to improve the open sharing of information along the supply chain, and eventually to the consumer. Awareness of the benefits of BIM technology will feature in future Affordable Housing programmes. The Homes and Communities Agency (HCA) take the view that BIM can give advantage in terms of both construction and maintenance in use for social housing providers and will encourage its uptake in the sector through challenge and facilitation.

The HCA would be like to be able to point to examples of relevant construction programmes or Demonstration Projects that have used BIM to allow us to demonstrate the benefits for social housing to the wider sector.

One barrier that has to be overcome, additionally, is establishing data exchange protocols that will enable suppliers to share information with themselves and consumers – effectively adopting cloud computing for housing design.

Government has put in place a protocol known as COBIe but it needs reviewing and extending and, if necessary, further protocols may need introducing.

We propose a Housing Forum backed research project to push forward with Building Information Modelling, reinforce particularly the need for better collaboration through the supply chain. BIM will only be effective if there is a sea change in the way the sector collaborates and shares information.

Promote custom build housing through obligations in public land use

Various types of self-build housing already account for 12,000-14,000 new homes a year, and the Government is hoping that a larger scale "custom-build" approach can help reverse the slump in housing starts. Custom-building aims to take the most difficult and least rewarding parts of the process out of the hands of self-builders, and involves an "enabling developer", such as a housebuilder or local authority, to help them.

The rise of the custom build market is in the vanguard of new standards of customer responsive design and service in the housing industry and has the potential to be a real game changer in consumers' expectations of choice. The demonstrable demand for this kind of development, fostered by the Grand Designs generation and evident in more mature self build markets in Northern Europe should be brought into the main stream of Local and Central Government policy.

Our view is that local plans should demonstrate a clear response to the locally expressed demand for custom build and contain strategies for delivering appropriate levels of supply. Release of publicly owned land should stipulate a commensurate proportion to be developed on the basis of custom build.

Guidance to encourage local planning authorities to draw up framework planning agreements that allow customisation of dwellings

Customisation of the housing product (custom build in particular) is inhibited by the increasingly prescriptive approach of local planning authorities to detailed planning approval. Solutions need to be found which enable decisions to be taken affecting the design of the product much later in the process than is usual currently so that customers' range of choice can be greatly increased. Research is needed on the application of Local Development Orders (LDOs) as a way of enabling this.

Local Development Orders are a mechanism for controlling the principle of development whilst allowing the detail to be determined much later in the process than is normally case. However, they are seldom if ever used in relation to housing where the opposite tendency has been generated. A collapse of trust on the part of the development control system has led to local planning authorities calling for more and more detail, ever earlier in the process.

In order to help stimulate Custom Build, Government needs to encourage the use of LDOs and provide appropriate guidance. LDOs can be used to create approved development envelopes for small infill sites prior to development by custom builders. On larger sites, significant numbers of plots could be allocated to custom build developers who would then obtain Local Development Orders with type approvals for a range of kit houses.

Industry backing for our proposed measures.

Many of the measures we set out above have strong backing from across the membership of the Housing Forum, as highlighted by these survey results.

What measures do you think would help to drive better performance and greater consumer choice in housing?