Slashing Domestic Emissions in a Decade of Recession
by Jo Abbess
8th January 2008
Electricity is Not All There Is
Despite the national obsession with the Carbon Dioxide Emissions from Electricity Generation, it only constitutes a fifth of the problem.
How do you solve a problem like Heat ? Direct household Greenhouse Gas Emissions from space and water heating and cooling are roughly a third of the UK total, roughly neck and neck with Transport emissions.
Despite Government promises about new homes being Carbon Neutral, an overwhelming majority of properties remain energy wasteful – those already built and in use.
Curiously enough, a change in the economic outlook for Property Investment could be used as leverage to increase energy performance in a large number of homes.
State of Play
Mortgage defaults and Reposessions are increasing, as the financial environment of the Property sector takes hits from all sides, including rising energy prices, badly managed debt and irresponsible home loans.
You would have thought that spending on home improvements for reasons of energy efficiency would be the last thing on anyone’s mind. However, the situation could be used to advantage.
We still have to green up housing, and actually this can be done despite the financial environment. We could attack a whole raft of problems at the same time.
Local Authorities gave up large swathes of social housing stock in the Privatisation Years to landlord investors and homeowners. The Buy-To-Let entrepreneurs are now facing a curious impasse.
Rental income on property investment is levelling off, as a high proportion of dwellings become available to let with every multi-unit development.
The future growth in the capital value of housing stock is also levelling off – as the bubble collapses inwards – there might even be a drop in house prices before a much slower growth emerges.
A slowdown in conveyancing indicates a strong desire for private landlords to shed their loss-making assets that is unmatched by purchases, as mortgages are refused and a general reluctance to move is seen.
Increasingly there is a seeping away of disposable rental income that could have been made available for making rented homes more energy efficient. Already, many tenants complain that their landlords are unwilling to make energy efficiency renovations and repairs.
Yet with the HIPS pack now mandatory for all property sales it will be in the owner’s interests to green up.
Social Housing Bond
Here’s where a Local Authority Social Housing Bond could work on this nexus of problems.
Here’s how it could work : a Local Authority issues a Bond to a private landlord, buying a fixed proportion of the asset from the owner in exchange for the legal right to the same percentage on the final Sale of the property.
They would also agree a fixed percentage of the rental income to be apportioned.
As part of the Bond conditions, the owner must spend around £5,000 on a greening package – to add the best and cheapest means to green – energy efficient biomass burners, solar thermal for hot water, draught proofing, full insulation, secondary glazing options (or shutters) and electrical heat pumps in the wall.
The capital value of the property will be retained in the mid- to long- term, so the Local Authority does not lose. The private landlord can continue to pay the mortgage and maybe even make a profit.
Paying for repairs and maintenance should be by mutual agreement.
Matching Up To The Nottingham Declaration
So, a Local Authority can (a) Increase the availability of Affordable Homes even in a downturn of Property Development; (b) Invest in sound energy efficient stock without losing capital, thereby greening up housing.
For those Local Authorities that have signed the Nottingham Declaration, this could be a useful mechanism to satisfy part of their commitment on Climate Change.