Housing Industry Leaders Issue 12

Enhancing Resident Engagement Through Thermal Imaging

Resident engagement is an essential key to accelerating retrofit.

As a new dawn emerges for the vision of UK housing, recent reports and policy announcements are welcomed news for all working in the industry. Housing Industry Leaders explores what this means for housebuilders and tenants in the UK.

In this issue, Housing Industry Leaders analyses how resident engagement is at the forefront of Kensington and Chelsea Council’s retrofit plans, whether ‘for-profits’ will dominate the market share, and why the Oldham RED WoLF project could be a game changer for energy use.

With a specific focus on how the social housing sector can expand its housing stock faster, Housing Industry Leaders dives into the most topical discussions and debates about the future of the housing industry.

housingindustryleaders.com

Hannah Wintle

h.wintle@peloton-events.co.uk

Contents

P.4

Could Growing Partnerships Between Associations and 'For Profit' Providers Benefit the Sector?

P.6

How has the Social Housing Landscape Changed Since 1979?

P.8

Re-Framing Away From MMC and Towards MMD

P.10

Enhancing Resident Engagement Through Thermal Imaging

P.12

Building Good Quality Housing Stock Across Scotland

P.14

The RED WoLF Project: Cutting Costs and Carbon Emissions

P.17

An Update on the State of Social Housing

P.19

Previous Editions

P.20

Housing Cymru Event Highlight

Multimedia Editor

Floyd March

Multimedia Journalist

Chelsea Bailey

Multimedia Journalist

Hannah Wintle

Graphic Designer

Edward Boustred

Could Growing Partnerships Between Associations and 'For-Profit' Providers Benefit the Sector?

by Floyd March

Recently, Savills Housing Consultancy published a report exploring the growth in for-profit providers which found that the sector has grown to 69 providers, owning 28,164 mixed-use properties. As this growth continues, could it threaten the affordability of housing?

This is up from 18 organisations owning 187 homes back in 2013. This decade has seen huge growth for the sub-sector, prompting mixed responses, from fears of providers selling up directly impacting residents, to ‘for-profit' providers incentivising house building across the UK.

Part of the report involved surveying these providers about growth plans up to 2030. Interestingly, many providers have certainty that this growth trend will continue at the back end of this decade, with the growth of another 9,300 by the end of 2023, reaching a total of over 110,000 by 2028, with over 100 providers in the field.

Could ‘for profit’ partnerships spur wider growth?

In a housebuilding era of slow growth, some in the sector feel like the certainty in this sub-sector could spur wider growth elsewhere in the industry. Others fear that ‘for-profit’ providers may buy up pre-existing housing stock, and it may not lead directly to more houses being built in the short to medium term.

Since March 2021, there has been a doubling in the growth of this type of provider which has been driven by an astonishing increase of 131% of general needs rented homes owned.

While still owning a small proportion of overall stock, just 0.7% of total stock in 2021/22, the market share has increased threefold over the last three years. This highlights significant growth in the sector.

Breaking down the market share further, just three companies own 77% of all stock in this sub-sector but the report explained that there will be diversification as pipelines are built over the next years.

Shared ownership definitely dominates the 'for-profit' housing stock and is projected to have a share of 69% of all stock by 2028, up from 59% currently. The rest of the share is between general needs rented and supported housing.

Tenants need to be at the heart of housing before profit

Some of the fears of this growth are that providers might seek to cash in on profits by selling stock. This could cause a lot of disruption to the market, and impact shared owners.

Despite this, though, Savill's report indicated that 90% of providers have no current plans to exit the sector in the next 20 years. However, this is naturally subject to change depending on the landscape of the sector over the next decades.

Increasing collaboration between associations and ‘for profit’ set to continue

The survey also found signs of increasing collaboration between traditional ‘not-forprofit’ housing associations and the ‘forprofit’ sector.

Collaboration between the two could be expected to grow further, as both FP and NFP sectors can offer each other unique values, experience and financial backing that they could not achieve on their own.

Echoing this, the survey revealed that nearly 90% of associations would consider one of these partnerships, while 43% revealed they are already working in some way with 'for-profit' providers.

Explaining this further, it was stated: “Partnerships between 'for-profits' and traditional housing associations are beneficial for both sides. 'For-profits' have significant volumes of capital to deploy and seek strong ESG characteristics but lack operational and development capabilities.”

On the other hand, housing associations have in-house operational and management expertise but require access to investment capital to invest in existing stock whilst maintaining their development programmes.

While this could be a win-win for collaboration, development programmes, and the sector as a whole, there needs to be a specific focus on keeping rent affordable for those living in the social housing sector and shared ownership programmes.

How has the Social Housing Landscape Changed Since 1979?

by Floyd March

With local elections ending and a general election looming in 2024, house building and affordability are taking centre stage in political debate. A recent report by Joseph Rowntree Foundation sets out the timeline of events that have led to the UK housing crisis dating back from 1979.

Setting out the overall context of where the UK housing sector currently stands, rising rents have seen spending on housing benefits grow over the last 30 years, and three policy levers – cash payments, social housing and rent controls – all have the effect of lowering the net amount of rent tenants pay.

Non-cash housing subsidies have shrunk markedly over the past 40 years, even as spending on housing benefits has increased. The value of housing subsidies has fallen from 16.5% of the total dayto-day cost of housing services in the national accounts in 1979 to 11.5% in 2019–20.

Lots of things lie behind this change in the landscape; less generous sub-market rents for social housing contributed five percentage points to the reduction in housing subsidies as a share of aggregate UK housing costs seen between 1979 and 2009–10.

The report explored the above and highlighted: “The social rented sector shrank from 31% to 17% of the housing stock, and social rents moved from around half to two-thirds of market levels.”

Despite these advantages, fiscal constraints will always limit the optimal size of the social rented sector.

There are disadvantages for tenants: “Who have little choice as to the precise location or type of property they are allocated. This may prevent them from taking up employment opportunities outside their local area, hampering productivity in the economy.”

Therefore, many in the sector believe that housing policy needs to offer a balance of these two forms of subsidy. The appropriate mix should be determined by differentiating between the needs of different household types.

Local allowance freeze should end

Authors of the report argued: “That for 1.9 million low-income families with children, pensioners and people with a disability, more secure housing tenure should be the priority.”

The report explained: “This is chiefly due to the right to buy offered to social tenants from 1980 onwards. The size of the discounts offered to social tenants made it an attractive option for those able to afford the mortgage repayments.”

The 1980 Housing Act also gave ministers permission to set target annual rent increases for local authorities in an attempt to reduce housing grants to local authorities. This saw councils' rents increase by 165% in cash terms between 79-80 and 88-99, according to Balchin and Rhoden.

However, this caused disparities within the rent levels across the UK, and at the time, between housing association properties and local authority rented properties. This was further reflected when considering housebuilding across the UK was also disparaged.

Joseph Rowntree Foundation

An additional 700,000 social properties could allow the level of social renting among lower-income families with children to return to its 1979 level.

According to the report, in order to enhance the experience of renting in the private sector: “Policymakers should end the Local Housing allowance freeze and re-link rates to the 30th percentile of local rents and introduce the reforms to the private rented sector outlined in the recent ‘fairer private rented sector’ White Paper.”

The housing landscape has changed since the 70s

A big change to the social housing sector over the 1980s and 1990s was the reduction in its size. By the mid-2000s, far fewer households benefitted from the sub-market rents and security of tenure available to social tenants.

Fast forwarding to 2002, the Labour Government tried to rationalise rent levels by setting a new target rent for each property rather than each region. This rent was determined by property size, estimated value and local earning levels. At this period of time, target rents were below the market levels and were only increased in line with RPI + 0.5% each year. Shortly after the Coalition, further convergence of social rents was considered unnecessary, and it was announced that social rents would rise in line with CPI inflation + 1% each year for the next decade.

In a U-turn with the new Conservative Government, there was the introduction of a 1% nominal reduction between 2016-17 and 2020-21.

The report explained: “This effectively increased the subsidy provided through sub-market rents for social housing and decreased that provided through housing benefits – the key objective behind the measure.”

Some of these households could be helped into homeownership with the appropriate policy reforms, but for many this will not be an option suggesting the significant need for additional social housing.

Re-Framing Away From MMC and Towards MMD

by Floyd March

Since the turn of the millennium, MMC has seen a dramatic increase in policy direction and business interest. Emerging technologies are facilitating contemporary methods. However, MMC construction projects are seemingly lagging.

A new report released by the UK Collaborative Centre for Housing Evidence highlighted what has gone wrong in the past and what can be implemented in the future.

In the past, serious quality issues ultimately led to the abandonment of this form of development and the stigma associated with failed past practices has made prefabricated housing largely unattractive to construction industries around the world as well as to end users.

Nonetheless, the report found that: “Contemporary modern methods of construction that typify industry practice in the early 21st century have been shown to bring about numerous benefits for the development industry, such as offering better building quality and highquality control, improvement of the speed of construction and a reduction in environmental impacts to name but a few (Zhang et al., 2018).”

As the housing crisis has crept in since the early 1980s, MMC has widely been coined as the core policy solution to tackle the crisis and address further systemic issues in the housing sector, such as energy efficiency.

Systemic supply issues persist

Other Systemic supply problems were described as: “Land supply, planning constraints, access to finance, skills and materials shortages and, more controversially, the speed of development.”

Technical barriers to MMC have been widely reported, and while it offers multiple benefits to the housing crisis and speeding up housebuilding, it is worth noting that there is significant research into the engineering constraints and materials-based issues.

From MMC to MMD: How would it happen?

The report suggests: “This narrow technical focus neglects aspects of the wider development process we think are equally important to consider if MMC is to gain wider industry legitimacy."

“Indeed, the paucity of research on MMC business models, regulatory practices and consumer preferences, in particular, belies the significant contribution these important aspects of housing delivery play in supporting or constraining the use of modern construction methods and, by extension, housing supply more broadly.”

In further response to this statement, the research involved with the report set out to examine the existing international evidence on modern methods of construction but from the framing of modern methods of development.

Our overall aim is to evaluate the potential role of modern methods of construction in addressing systemic supply issues.

UK Collaborative Centre for Housing Evidence

This framing shifts the focus away from construction - which is but one aspect of the development process - to a broader institutional perspective capturing the complexities of housebuilder business strategy, regulatory protocols and predilections of the end user.

From this research, they found that: “Regulation can be a driver, facilitator and promoter, yet confusing regulations and slow processes also hinder MMC uptake. We also found a bias towards tradition and business culture inertia within the business models of housebuilders but with some evidence of hybrid strategies and a new paradigm of quality emerging within the industry.”

Other parts of the review revealed an adverse public impression of MMC, where the characteristics of the consumer play an important role in driving interest, but design concerns exist around the balance between standardisation and customisation.

MMC is often considered too risky

When it comes to business models, the evidence reveals that MMC requires unique processes that are often considered risky due to project complexity and a fragmented supply chain.

These issues indicate that the take up of MMC practices - and modular housing in particular - by the currently dominant producers may be unlikely and may help explain why MMC has not become an industry norm, remaining the preserve of ‘disruptors’ and specialist SMEs.

“We conclude our report with a suggested re-framing away from MMC and towards modern methods of development (MMD), which we hope will reframe policy and industry debates away from a narrow focus on construction to a broader consideration of how the key components of residential development can enable or constrain MMC uptake.”

Enhancing Resident Engagement Through Thermal Imaging

by Hannah Wintle

ALondon borough is giving its residents the chance to identify thermally inefficient areas in their home by loaning out thermal imaging cameras.

Believed to be the first of its kind in the country, the program is being piloted on the Lancaster West Estate in the borough of Kensington of Chelsea.

After initially using thermal imaging cameras to evaluate the efficiency and cost effectiveness of flat refurbishments, the council soon realised the value of being able to pinpoint thermal efficiency on a flat-by-flat basis.

Being able to see the impact of retrofits while also being able to highlight areas of heat loss was an ‘educational’ experience not only for the council but also for residents, who then expressed an interest in evaluating the thermal efficiency of their own homes.

The scheme was born on the back of this revelation, and now the 700 households on the Lancaster West Estate are actively encouraged to borrow the kit to discover any cold spots in their home.

Having identified where heat is escaping, the council can work with residents to offer solutions such as draft excluders and smart thermostats, improving insulation and ventilation across the estate. The data collected from these measures may then be used to inform future retrofits.

Councillor Kim Taylor Smith, Deputy Leader with responsibility for housing, said: “We’re proud of this pioneering thermal imaging equipment loan scheme which will help us make Lancaster West a paragon 21st Century estate with safe, secure and warm homes for residents.”

One of the major benefits of this scheme is the ability to: “Help people identify fast fixes in their homes while we [the council] roll out our programme of major works across the estate.

“This will help us be a carbon net zero council by 2030 while also helping residents keep their energy bills lower once work has been carried out in their home; all part of our Council Plan to be greener, safer and fairer.”

While there is a standard refurbishment plan for the residences on the estate, the thermal imaging cameras allow for a more bespoke approach to target specific areas of concern.

By giving residents the tools to consider heat efficiency in their homes, the council hope to help keep their energy bills down during a time when energy prices have soared.

Councillor Kim Taylor Smith added: “It's very much part of an educational process with people in terms of conservation. So, we launched a pilot scheme to allow residents to borrow these cameras,

Funds will primarily go towards improving insulation by way of cladding and triple glazed windows, but there are also plans to install air source heat systems on not only the Lancaster West Estate, but also the local school and leisure centre.

Housing and buildings are the biggest carbon emitters in the borough, accounting for 80% of carbon emissions. It is hoped that improving housing heating efficiency will progress the council’s ambition to be a carbon net zero council by 2030, while creating a greener, safer, and fairer borough that is carbon neutral by 2040.

Educating residents is the way forward

By involving the residents in the scheme and allowing them to take a hands-on approach, the council hope that the scheme will foster a genuine interest in working towards a net zero goal, as well as seeing the added bonus of reducing energy bills.

“One of the things we have found is that when we've been doing all our surveys with our residents, as to what's important to them carbon zero is a very high priority,

The council also wish to roll out the program across other estates in the borough, offering more residents the chance to assess the energy efficiency of their homes.

In addition, Kensington and Chelsea Council plan to share best practice with other London boroughs, highlighting the benefits of the scheme and emphasising how valuable it is to educate residents on the importance of energy conservation. Since implementing the campaign, the team at the council responsible have been shortlisted for three Awards, including ‘Climate Champion of the Year – South’, in recognition of their progress in decarbonising the housing sector.

Building Good Quality Housing Stock Across Scotland

by Floyd March

Scotland have recently launched their Affordable Housing Supply Programme (AHSP) in September 2022.

This programme comprises a range of funding mechanisms for housing providers to deliver homes for social rent, mid-market rent and low-cost home ownership.

With a commitment to delivering 110,000 affordable homes by 2032, the Scottish Government has allocated £752m for 2023-2024 to help support their plans. This comprises of a total capital grant of £581m and financial transactions up totalling £171m.

Scottish Government have also allocated £3.2bn to the country’s local authorities, through Resource Planning Assumptions (RPA) for five years (up to 2026), which assists each council to plan their housing supply.

This includes:

• Glasgow £537m

• Highland £240m

• Edinburgh £233m

• Dumfries & Galloway £106m

• Dundee £89m

• Perth & Kinross £86m

Retrofitting for Net Zero

Scotland is now mandated to produce energy efficiency and heat decarbonisation through the Local Heat and Energy Efficiency Strategies (LHEES).

Accompanying the Strategies will be LHEES Delivery Plans, which will be developed in partnership with key stakeholders, and provide a strong basis for action for local communities, government, investors, developers and wider stakeholders, pinpointing areas for targeted intervention and early, low-regret measures.

This has led Scotland’s leading authorities to launch their Housing Strategies.

Glasgow Council have launched their draft Housing Strategy 2023 – 2028 focusing on reducing carbon emissions and increasing the carbon efficiency of existing homes, reducing fuel poverty and exploring the potential for heat networks.

Edinburgh Council have launched ‘City Plan 2030’

To tackle the rising population in the city, and with evidence of people’s changing habits due to climate change, their proposed plans include maximising the use of brownfield sites. Their plan includes building 37,000 new homes up to 2032.

Fife Council have confirmed plans to build 1250 homes over the next five years. The programme moves into its fourth phase with £151m to be invested to support the programme and provide new homes.

All this and more will be discussed at our Housing Industry Leaders Scotland conference. For more information as to how you can get involved email enquiry@peloton-events.co.uk, or phone 0161 519 8950

Scotland

Radisson Blu, Glasgow

29 November 2023

Building on the initial phases of the Affordable Housing Supply Programme, this one-day conference will explore how funding mechanisms for housing providers help to deliver homes across Scotland.

With a commitment to delivering 110,000 affordable homes by 2032, the Scottish Government has allocated £752m for 2023-2024 to help support their plans.

The event will highlight how Scotland will Deliver Affordable Housing, why Retrofit is essential for decarbonising existing housing stock and how low-carbon technologies will support this. This will be done through keynote speeches, panel discussions and technical seminars.

#HousingScotland

#HousingLeaders

housingindustryleaders.com

The RED WoLF Project: Cutting Costs and Carbon Emissions

by Hannah Wintle

An EU-funded project is cutting energy costs and decarbonising European homes by installing hybrid storage systems.

The RED WoLF project, which stands for ‘Rethink Electricity Distribution Without Load Following’, is currently running six pilots in the UK, Ireland, France, and Luxembourg.

With a total budget of €6.06 million, Interreg North-West Europe has provided €3.64 million in funding for the project.

Pilot homes with photovoltaic solar panels have been fitted with a smart controller which communicates with a hybrid storage system, merging battering and storage heaters.

While the heaters supply heat on demand, the batteries store low-carbon energy drawn from the national grid at times of low demand, as well as the solar panel’s output.

Algorithms within the smart technology enable communication with the grid, as well as taking half-hourly energy pricing input to provide electrical heating at a cost comparable to gas.

Approximately 100 houses are being utilised across the six pilots, with a total estimated reduction in carbon emissions by 215 tonnes/year.

There is potential for national decarbonisation

In communicating with the grid, the mismatch between energy generation and usage will be eliminated.

Currently, any energy that is generated but not used is often wasted, but during times of high demand, energy from renewable sources cannot be relied upon alone. In these instances, high-carbon, ‘load following’ power plants are activated to meet demand.

Stored energy within RED WoLF’s hybrid storage solutions, however, provides an alternative, cleaner solution than relying on these power plants.

If more houses install these hybrid storage systems, the peak in demand would be far lessened, as household energy consumption during these times would be facilitated by stored energy.

Reducing the need to turn on load following power plants means that carbon emissions are drastically reduced, as renewable sources of energy are utilised to a greater degree.

Dr Giuseppe Colantuono, Creator and Lead Partner of the RED WoLF project, said: “This also creates more room for renewable electricity on the grid.

E

ven with the current set up and without adding extra renewable generators, the percentage of that energy will increase because you will waste less of it.

Dr Giuseppe Colantuono Creator and Lead Partner RED WoLF Project

“This would be more and more important because this waste of green energy, if we don't take action, will become even stronger in the years to come.”

Social housing stands to gain from this technology

Tenants of social housing, who are often on lower incomes, face a higher threat of fuel poverty, emphasising the importance of keeping energy bills down.

RED WoLF can combat this by heating homes more efficiently and economically. Stored energy is cheaper than using energy from the grid at peak times as it reduces costs by the local distribution network operators and eases the energy demand.

Andrew Hunt, Green Energy and Sustainability Manager at Oldham Council, emphasised that in addition to keeping bills down, the REDWoLF system is a straightforward system to deploy at scale.

He said: “Apart from the controller itself, the RED WoLF systems that we’ve installed have always been fairly standard equipment.

“Storage heaters, solar PV, battery storage, these are all things you can get hold of easily and a lot of installers are already familiar with these technologies.

“The part they have to be upskilled on is relatively small, so the contractors that social housing organisations normally use could be easily trained up to do this.”

Smart technology presents a learning curve for some

While promising results have been observed so far among the pilots, the need for education among residents has been highlighted.

In one of the pilots in Oldham, the equipment was installed during the pandemic, and there was no opportunity for face-to-face explanations. Instead, residents were given information packs.

Some residents grasped the technology well and saw a significant reduction in their energy bills, while others struggled to adapt.

Explanatory leaflets based on lessons learned throughout the pilot could provide a solution to ensure that everyone is able to access the benefits of the new technology in their homes.

Continued on page 16

Further funding for a future-proof roll out

With funding until September 2023, the project partners are currently looking into commercialisation options, eager to bring this cutting-edge technology to homes in North West Europe on a broader scale.

Andrew Hunt explained that rolling out this technology on a mass scale would need further financing, perhaps in the form of a government grant.

The UK Government’s Green Homes Grant previously enabled applicants to make energy-efficient improvements to their homes, but he expressed hope that further grants will be expanded to make other technologies eligible, such as RED WoLF.

Andrew also commented on the public’s readiness to embrace this kind of technology.

He said: “There are already some basic storage systems that you can buy, like a battery which will store some energy from your solar panel.

“People are already getting familiar with the idea of having a battery in their house, connected to their solar panels to make the most of the financial benefit of solar panels.

“But there is nothing out there that’s as sophisticated as the RED WoLF system.” Though commercialisation and the route to market are still being contemplated by those involved with the project, the success of the pilots has generated confidence in the system’s aptitude for a wider rollout.

An Update on the State of Social Housing

by Floyd March

In the latest installation of the Housemark survey, which sees over 350 members help chart the performance of UK social housing providers, there have been new revelations as policy and regulations tighten across the sector. Each month, the survey covers 15 key performance metrics, such as tenant satisfaction, complaints, building safety, staffing and repairs; all key aspects of the social housing sector that have come under particular scrutiny over the last few years.

In April’s edition of the report, there was a focus on rent arrears, an update on gas and electrical safety checks, complaints and satisfaction levels, and whether digital communications are finally on the rise.

Back in March 2023, UK Government launched a publicity campaign to ‘empower social housing residents to raise complaints’. By the end of March 2023, Housemark found that: “Formal complaint volumes had increased by almost 19% compared to February – this represents a 78% increase in complaints volumes from March 2022.”

Digital communication slowly improving

Increasing communication between landlords and residents has been a core issue for many years, with digital communication acting as a buffer for the issue.

While gas safety levels have been stable throughout the year – with a median just below 100% - the report found that electrical safety inspection rates have risen incrementally by 0.9 percentage points as greater numbers of homes have updated checks for this measure.

Our

shows that a typical landlord’s digital contact was between a quarter and a third of all communications with residents. At the top end, landlords are recording just over half of all contact through electronic media, while the lowest scores are around 1 in 10 interactions.

Housemark

Satisfaction still tumbling - but there are reasons

In March 2023, median customer satisfaction rates were 77%, which is two points lower than March 2022 (75%) and 8-10 points lower than equivalent results pre-2020 (c. 87%). This can be linked to the previously discussed policy announcement. Tenants are increasingly aware of how to find and report issues, and expectations of living conditions in social housing are increasing.

It will be interesting to see the growth in repair and maintenance projects over the coming months and whether the social housing sector is responding to the increase in complaints.

Finally, the report highlighted:

“The pattern of rising and falling arrears through each month in 2022/23 is almost identical to 2021/22, with median arrears rates finishing the year at a similar level.”

This demonstrates that landlords working in the social housing sector have managed to collect rent and clear arrears despite the worsening economic conditions presented by rising inflation and the cost-of-living crisis.

data

Cymru

Mercure Holland House Hotel, Cardiff

11 July 2023

KEYNOTE SPEAKER

Rt Hon Mark Drakeford MS

First Minister of Wales

Building on the initial phases of the Optimised RetroFit Programme (ORP), this one day conference will explore how a whole house, pragmatic approach to decarbonising existing homes is essential across Wales.

Setting out core objectives of the ORP, Rt Hon Mark Drakeford MS will explore the core themes of the programme, including affordable warmth decarbonisation goals and understanding the best pathway to better energy efficiency for social homes and their residents.

The day will consist of a series of keynote speeches, panel discussions and technical seminars, with an exhibition zone running throughout the day.

#HousingCymru

#HousingLeaders

housingindustryleaders.com

Covering all Angles of the Housing Industry

11 July 2023

Mercure Holland House Hotel, Cardiff

Why Housing Industry Leaders?

Setting out core objectives of the ORP, Rt Hon Mark Drakeford MS will explore the core themes of the programme, including affordable warmth decarbonisation goals and understanding the best pathway to better energy efficiency for social homes and their residents.

The day will consist of a series of keynote speeches, panel discussions and technical seminars, with an exhibition zone running throughout the day.

Join us on 11 July 2023 at Mercure Holland House Hotel, Wales, where housing leaders, experts and innovators will be discussing what is needed right now to drive meaningful change and create communities for the future.

Join the conversation #HousingLeaders