Scoping study for assessing decisions on when to build new rather than adapt old housing

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Executive Summary

Background

Through its commitments made as part of the 2008 Climate Change Act to reduce Carbon emissions by 80% by 2050, the Government has set the UK on a long term path that will require significantly lower demands for energy across all sectors of the economy. This will touch many aspects of way we work, travel and live – in particular, the homes we build and the energy we need to run them will need to change significantly.

In 2008, UK households accounted for 24% of greenhouse gas emissions through daily demands for warmth and power (DECC, 2010). It is well understood that this demand could be reduced significantly if homes were upgraded to higher levels of energy efficiency performance and there are a range of policies and programmes targeted at doing exactly this.

New housing is now built to significantly better energy performance standards than ever before, and outperforms a large proportion of the existing housing stock but there is still some way to go before new housing is as good as it could be. This naturally leads to questions over whether it is always worth attempting to refurbish existing properties to a higher standard, or if it might be more cost/carbon effective in the long run to demolish and build new.

Perhaps unsurprisingly, this question is not as simple as it may sound. The carbon emissions from a new home do not begin from the day the first tenant moves in – the construction of new housing involves a substantial amount of energy due to the products and materials used in their construction, and it is argued by some that this 'embodied carbon' needs to be taken into account in any decision concerning the removal of older housing and replacement with new. Other factors such as the loss of heritage and communities also come into play, along with concerns over the demand for natural resources and the relative volumes of waste associated with each option. Throw into the equation the day-to-day pressures on developers to realise profit quickly, with minimal costs and risks, and it becomes clear that this is going to be a subject with few straightforward answers.

This research aims to provide some initial clarity over the nature of these decisions and where they might arise, while attempting to scope the issues and factors that are influencing decision makers.

Approach

From the outset of this project, it was clear that this 'decision making process' was complex, multi-factorial and generally not well understood within the property sector. As a result, choices could be made using incomplete information and unsystematic procedures. This below-optimum situation is not altogether surprising; the factors which can determine whether to refurbish or demolish and redevelop include financial, technical, social, legal, environmental and architectural heritage considerations. Moreover, each can be subject to rapid change as market conditions, legislation and technical innovation can radically alter the parameters within which the property owner must operate.

A number of different research methodologies were chosen in order to examine the often complex and
sometimes conflicting drivers in the most comprehensive way possible. We undertook:

A literature review of current research and case examples, and identification of relevant existing and pending legislation.
An on-line survey carried out between May and July 2009 in collaboration with the College of Estate Management which produced responses from 450 property professionals working in the residential sector, identifying key drivers in the decision making process.
The identification of case examples through discussions with Registered Social Landlords and other developers.
A pilot survey of commercial property professionals to obtain a more complete picture of the current refurbishment versus redevelopment debate. Questionnaires were sent to the senior managers of six leading property organisations who were asked to comment on current attitudes within their companies. These organisations were: Prudential Property Managers (PruPIM; who manage over £11 billion of property assets in the UK); the property managers and investment consultants DTZ; GVA Grimley and Knight Frank; the property company Land Securities and the costs consultants Davis Langdon.

Findings and Conclusions

Demolition levels in the UK are relatively low

Demolition levels are still relatively low compared to previous levels and given the size/age of the housing stock.
Detailed data to show the relative proportion of demolition and new build in relation to refurbishments could not be identified.

There are still large numbers of properties that might be subject to a 'refurbish/demolish' decision

Properties in areas of low demand, and properties that are long-term vacant, as well as homes which are classed as non-decent, will continue to prompt decisions on whether to refurbish or demolish.

The choice for developers will usually favour demolition

Many are familiar with the need to make decisions in this context.
The 'zero rate' of VAT on new build projects can be the deciding factor against 'standard rate' refurbishment projects;
New build is seen as less risky, with fewer hidden costs;
New-build projects are seen to provide the advantages of more modern layouts, which were felt to be easier to achieve when unconstrained by existing structures.
New build can give the opportunity for more standardised projects, with 'off-the-shelf' designs already tried and tested by customers.
The opportunity to increase density can also provide the opportunity to maximise the financial return on a given project.

There are good reasons for developers to refurbish

Older buildings can often be acquired cheaply,
They require less time to complete;
Some older buildings carry an additional financial premium for potential buyers.
Evidence suggests that many older buildings (pre 1919) can be brought up to the current building standards without significant problems.

Decisions to demolish or refurbish are complicated – but tools can help

Practitioners generally do not use formal checklists, proformas or other tools in this context that could helpmake the decision making process more systematic and more rigorous.
Most professionals would welcome more guidance and information to make informed decisions.
Project Management tools are helping some to ensure 'due diligence' considerations are being made, and were providing greater accountability in the decision making process.

There is demand for easy-to-use environmental assessment tools to quickly calculate carbon and financial impacts for new build versus refurbishment.

Waste, resource consumption and heritage are important factors - but can be managed.

Refurbishment projects generally use fewer natural resources and produce less waste than demolition and new build projects.
When demolition and new build projects follow current best practice, waste to landfill can be massively reduced; resource consumption can be mitigated through well-managed recycling and reuse procedures.
For Heritage – guidance produced by organisations such as English Heritage, can help identify heritage value and minimise the loss of heritage.
Developers have realised that there can be added financial value associated with refurbished older properties.

Embodied Carbon is important - but does not mean that all properties should be refurbished.

When replaced with a new-build with high levels of energy efficiency, the argument for keeping buildings of poor standard, with low heritage/architectural value, built in low density, will be not be strong.
Evidence suggests that the gap between savings from operational, in relation to embodied carbon may not be as great as previously thought.
Recent studies appear not to have given consideration to the impacts arising from new infrastructure required in new developments - roads, footpaths, drainage and services; this would further favour refurbishment as the better environmental option.
A method is needed to compare operational and embodied energy for a building type/construction/period.
A research approach was identified and carried out on a large scale to establish the relative 'embodied carbon' value of a broad range of property types and thus form the basis of a tool.

Large programmes of clearance can be unpopular – but pressure is growing to increase demolition rates

There will be an ongoing need to remove properties that are too expensive to upgrade, are of too low a density, and are in areas of low demand.
Many previous schemes to clear large areas of existing housing stock have not been well received
There is a considerable amount of low density housing of indifferent architectural quality which does not perform well in energy terms.
If a policy of removing the worst performing housing were to be pursued, a survey of the existing stock should be undertaken on an area-by-area basis.

Recommendations

It is important to better understand and monitor levels of demolition and refurbishment activity - a system should be implemented to track and quantify by project types.
The VAT rate should be reduced to give a more level financial playing field when deciding between refurbishment and demolition/new build.
Project Management tools (e.g. SDS Sequel, ProDEV etc) should be used more extensively in order to ensure more systematic 'due diligence' procedures and greater accountability in the decision making process.
Demand was found for an easy-to-use assessment tool through which housing developers in particular could quickly calculate both carbon and financial impacts for new build versus refurbishment. An existing commercial development decision making tool (BRE's Office Scorer) should be adapted for the residential sector.
A national assessment programme should be undertaken to understand and identify properties of poor quality and low energy efficiency, which would be prioritised in any future demolition considerations. Heritage value needs to be classified beyond the current listing scheme allowing these to be considered more favourably for refurbishment. Demolition and new build should therefore be undertaken on a much more selective basis.
Further research should be carried out to measure embodied environmental impacts from construction using the existing ICE/BRE datasets held at the University of Bath, along the lines of the recent Empty Homes Agency study.