Decarbonisation and Net Zero: Challenges for the UK housing sector

Decarbonisation and Net Zero: Challenges for the UK housing sector

In September 2021, Campbell Tickell ran a webinar exploring what the challenge of Net Zero means for housing organisations and the people who manage them. 

Lots of great questions were submittedbut we didn’t have time to answer all of them In this blog, Robert Kingsmill (RK)Partner at RESAM, answers some of them from his viewpoint, while Jon Slade (JS), Director, offers the CT perspective.

About the webinar

Through our discussion we aimed to cover four key areas: 

  1. Social value. The balancing act of maximising financial opportunities and mitigating risk while improving lives and communities.  
  2. Maximising grant. Are we bid-ready to maximise ‘retrofit revolution’ funding opportunities?  
  3. Strategic asset management. How to translate the challenge to solutions in your portfolio.  
  4. Future-proofing strategies. Net Zero can improve our existing corporate strategies and operational success, but will this comply with our existing asset base? 

Our panel included: Tracy Harrison, Chief Executive at NHC; Malkit Sagoo, Former Director of Assets at Midland Heart; Joanna Hills, Director of Assets and Services at Raven Housing Trust and Sam Brett, Senior Adviser to RESAM and Director at Integ Consulting.

Questions & Answers

1. Behaviour change

Q. Behaviour change is a vital part of the solution but it’s hard. What good examples are we seeing which addresses this? 

RK: While Behaviour change is outside our remit of work, in our view the first part is about having a clear strategy in place, addressing the question:  How are we going to invest in and evolve the homes we own so that they are Net Zero by 2050? 

With a clear strategy built on detailed understanding of the organisation’s portfolio, the next challenge is ensuring that operational decision making is consistent with the strategy, and the behavioural change will – (or should!) – follow.  


JS: Achieving change in how people use buildings has a huge contribution to make. Asset management professionals are typically more comfortable working on buildings than working with people to change behaviours. But projects such as Relish have demonstrated that changing behaviours can make a significant contribution to the decarbonisation agenda. We are seeing growth in the use of smart controls, thermostats and sensors across the sector, Switchee being one example, and Halton’s sensor project being another. 

It will be important to focus on having adult to adult conversations between organisations and residents, rather than old fashioned parent and child relationship, where the organisation tells the resident how things will be. 

2. Carbon offsetting

Q. Does the panel have a view on carbon offsetting for homes that are not going to be able to reach Net Zero for reasons of being Listed, or where the cost cannot be justified?

RK: The idea is an interesting one and may be a very good solution for some organisations, particularly where they own a large percentage of listed assets. For example, a hybrid solution combining refurbishment and physical improvements with off-setting, could be appealing.  

Our experience is that this is a portfolio wide challenge, and the greater part of the challenge right now is across a much wider part of organisations’ portfolios than just listed assets. Clearly a number of solutions are therefore required.  


JS: There is a risk that offsetting is the easy option. When deployed as the logical end point to address properties where full remediation is either not possible or not economic, then off-setting will have a part to play.  

Organisations’ will want to focus on the quality of their data and the cost/quality of their remediation. And be validating that offsetting is being used as the last resort.  

3.  Stock disposal

Q. The issue with disposal is that the property will still require bringing up to standard by the new ownerso the net effect to the environment is no different to just playing a game of pass the parcel.  In the end, the property will either need demolition and redevelopingor major grant input to do a major refurb of the building to have any impact on such difficult properties.

RK: This is a very good comment, and a hard one to write a short answer to!  

There are some major questions to be resolved on disposal, and the physical condition of the stock to be disposed, which traditionally has been in poor condition, sold as-is, and as you correctly identify, merely transfers the problem.  

Further, our data reveals that it is usually transferred to private sector developers who either: 

(a) upgrade and flip the asset – leading to value leaking out of the sector; or 

(b) use the asset to provide low-quality housing which diminishes the lived experience of residents.  

We are a proponent of a more tailored, socially driven, disposal methodology, where each asset is evaluated, and where suitable, upgraded to provide good quality homes for first home buyers and other end users.  

In our view, we must also think of replacement homes as an important part of the solution. Using the proceeds to develop new homes means that we can improve and evolve our asset base to become younger, less costly to maintain, as well as more sustainable. Each new home built from disposal proceeds is a home which wouldn’t exist otherwise. 


JS: Although we are seeing (and have worked on) an increase in disposals and stock swaps these have been triggered by issues other than the long-term sustainability of the specific assets. Disposal, like offsetting, is an option of last resort. Might disposal have a part to play? Yes, in certain circumstances it may offer the opportunity to achieve better outcomes than retaining the stock. 

Historically, the sector has not turned away from challenges offered by its buildings such as system builds where the system underperformed over time. Decarbonisation represents a similar challenge but on a wider scale. Decarbonisation and building safety between them make high-quality, data-led strategic asset management as ‘must have’.  

4. Technology

Q. What is the view of the panel on technology in the decarbonisation of stock? 

RK: Technology and data seem to us to be both an historically major transformational change, and simultaneously a dangerous rabbit-hole, which runs the real risk of becoming an end, rather than a useful tool to deliver results!   

So, our view is the right question to ask is: What is the data we need to answer the questionAnd then to set about the best way to find it and most importantly, make it usable.  

For decarbonisation, this is a challenging mix of portfolio level information. Many registered providers have, to varying degrees of quality – financial information, and maintenance planning – which tends to be pretty good. Organisations also need to incorporate resident experiences and expectations, such as: Is this a good house to live in? Is the neighbourhood right for me? And what are the living costs likely to be, etc.? 

We have built a tool that incorporates all these factors. We believe that to build a coherent strategy, which properly addresses decarbonisation and other portfolio challenges, you need good data but it needs to be carefully tailored to provide meaningful input to decision making to avoid ‘being overwhelmed by data on spreadsheets’, as you rightly are concerned about. 


JS: Technology has a huge part to play in defining the task, in developing solutions and in implementing solutions. Much of what is needed represents a step change from how social housing asset management has operated for the last 30 years. New skills and new ways of thinking and doing are needed.  

The rate at which an organisation adapts will be a key determinant in corporate success. The big risks arise not from technology per se, but from how an organisation interacts with the subject.  

Building capability and capacity from within and bringing in new resource when necessary are crucial risk mitigations.

 

If you’d like to discuss any of these questions further, feel free to contact Campbell Tickell’s  Jon Slade, Director, Campbell Tickell on: jon.slade@campbelltickell.com. 

If you missed the webinar, you can catch-up and watch the recording. 

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Disclaimer: We welcome guest blogs and articles for our website and CT Brief. The views, opinions and positions expressed in such blogs and articles represent those of the authors and do not represent those of Campbell Tickell.


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