Owners of newly built homes are being hit with higher heating bills because tough new energy efficiency standards were scrapped, a report has said.
If the “zero carbon homes” policy had been implemented as planned in 2016, people moving into new homes would be saving more than £200 a year on their energy bills, the Energy and Climate Intelligence Unit (ECIU) study said.
The zero carbon homes policy was first devised in 2007 as a requirement that new-build homes would not result in the net release of any carbon dioxide into the atmosphere, and was set to be implemented in 2016, the report said.
But it was scrapped in July 2015 by then chancellor George Osborne – after having been watered down since it was first announced – as part of plans to boost productivity, including increasing house building.
The report from ECIU said building a home to zero carbon standards would in theory add 1-2% on to the purchase price.
But it suggested the impact of the help to buy scheme, which critics have said enabled sellers to ramp up prices because buyers only need to find a small deposit, on house purchase costs is much greater.
The extra costs of the more efficient homes would be recouped through energy bill savings within a few years and may even have been absorbed by developers, the study argues.
Since the beginning of 2016, some 380,000 homes have been built, and their heating efficiency falls short of what would have been needed to meet the zero carbon homes standards.
Current new-build homes require more than twice the energy to heat than a zero carbon home would have done – which based on current retail gas prices will have cost a cumulative £122-£137 million in England, the report claims.
Families who moved into their homes at the start of 2016 will have been paying on average an extra £208 to £233 a year per year to heat their houses, it said.
If current house-building rates continue, by the end of 2020, the amount of wasted energy to heat these less efficient homes will be more than £2 billion, using up enough extra gas to fuel 3.3 million homes for a year.
And it makes it harder to cut carbon emissions from homes, a necessary part of tackling climate change, and one where experts say the first step should be increasing efficiency.
Dr Jonathan Marshall, ECIU head of analysis, said: “Successive governments have struggled to devise effective domestic energy efficiency policies, meaning carbon emissions from homes are rising, but zero carbon homes could have made a real difference.
“As well as future-proofing new homes, the policy would have saved families money, reduced Britain’s vulnerability to energy supply shocks, and cut carbon emissions.
“Tackling new-build homes is one of the easiest ways of improving the UK’s leaky housing stock, and reintroducing this policy could also deliver a boost to firms involved in insulation and low-carbon heating.”
Paula Higgins, chief executive of the Homeowners Alliance, added: “Homes should be built to the highest standards to be fit for this and future generations. Government and industry need to recognise that it’s in everyone’s interest to get this right.”
Minister of State for Housing Kit Malthouse said: “I don’t agree with the assertion that energy efficiency regulations have been watered down – in fact new homes built in England have increased in efficiency by over 30% since 2010.
“As well as cutting carbon emissions to tackle the threat of climate change, our efforts have actually put an average of £200 a year back into the pockets of families.
“There is more we can do to secure more efficient homes and, following our ongoing review of Building Regulations, we will likely consult on further energy saving proposals later this year.”
The Ministry of Housing, Communities and Local Government (MHCLG) has released figures that show where homes are being built including those on flood risk zones and potentially contaminated land.
Its figures for 2016-17 show that more homes were built on flood risk areas and the green belt.
More than one in ten (11%) of new residential homes were built within areas of high flood risk. This is an increase on 9% recorded the year before. However, it could be more according to Future Climate Info Urban Homebuyer Flood Risk Report.
Geoff Offen, managing director at Future Climate Info, said: “The government notes more than one in ten new homes in 2016-2017 were built on sea or river flood plains which are prone to flooding. But with more granular information available, it’s possible that even more homes may be susceptible to flooding.
“Our data shows that around one in seven homes in 2016-2017 were at risk of flooding, a figure that climbs to one in three in some urban areas.”
Previously developed land
MHCLG said that over half (56%) of new residential addresses were created on previously developed land, which is 5% down on 2015-16. The main previous land use categories are:
Agricultural land – 16%
Other developed use – 14%
Industrial and commercial land – 13%
Offen commented: “As we build, more secrets beneath our feet may become apparent too late. According to government figures, nearly half of new build properties were built on previously developed land in 2016-17, which means these homes could lie on contaminated land, unstable ground or in areas that exceed legal air quality levels. Homebuyers will only become aware of all risks by assessing an environmental report and then following its advice.
“The risks of flooding, subsidence, sink holes and contaminated soil can all leave unprepared homeowners out of pocket every year. It’s crucial that all homebuyers are informed, prepared and aware of the risks around them.”
The government’s Help to Buy loan was launched in 2013 with the aim of helping young people onto the housing ladder.
Available only for new-build homes, the idea is simple: the government lends buyers up to 20 per cent of the cost of the home, and the buyer then only needs a 5 per cent cash deposit and a 75 per cent mortgage to make up the rest.
The government part of the loan – the 20 per cent – is interest-free for the first five years.
Between the scheme’s launch in April 2013 and the end of December 2017, almost 159,000 properties were purchased using a Help to Buy loan.
This year marks the fifth anniversary of the scheme, which means payments on the first Help to Buy loans are now becoming due, initially at a rate of 1.75 per cent. On a loan of £40,000 this equates to £700 a year or £58.33 a month. After that, they will increase by the rise in retail price index, plus another 1 per cent every year, which means that £58.33 monthly repayment will shoot up to at least £91.60 in year seven.
So with this in mind, is the Help to Buy scheme a good investment or is it a ‘buy now, pay later’ scheme about to cause financial problems for many suddenly faced with new interest payments?
You can get on the housing ladder sooner
The first clear benefit of the scheme is that it can help first-time buyers get onto the housing ladder a lot sooner than they may otherwise have been able to. With Help to Buy, borrowers only need to find a 5 per cent deposit, which means not only can they can save their deposit more quickly, but, as house prices have risen significantly over the past five years, means they potentially bought the property for less than if they had had to wait. The value of this has already been demonstrated by the 159,000 who have already used it.
You could buy with a smaller deposit but get better mortgage rates
To buy your first home most lenders are looking for 10 per cent deposit. Which means on a house worth £179,594 (the average cost of a first time buyer property) the buyer would need a deposit of £17,960 and be left with a mortgage of £161,635.
With the Help to Buy scheme, the government puts in 20 per cent and the borrower only has to find a deposit of 5 per cent. This means on the same property, the borrower pays a deposit of £8,980 but is left with a much lower mortgage – £134,696 and therefore a better loan-to-value and consequently a lower mortgage rate. So, not only is the main mortgage lower, but the client also gets a more competitive rate of interest.
You can borrow interest-free for five years
Buying a home is obviously an expensive business, but it does not stop once the contract is signed and the house is bought. There are all sorts of other expenses in the first few years of owning a new home, and the fact the government portion of the loan is interest-free for five years can be very helpful.
However, while the Help to Buy scheme gives those who could not otherwise afford to buy the opportunity to do so, there are drawbacks, and advisers must ensure their clients have carefully considered these before committing to a loan.
The loan gets more expensive
The interest on the government portion of the loan is quite low when it becomes due: 1.75 per cent. However, after the sixth year, the rate starts to increase. The borrower needs to have budgeted for this, which is what the first swath of Help to Buy borrowers are facing right now.
This sudden introduction of charges can cause problems for those who are unprepared
While the interest-free loan seems very attractive at the time, once the borrower has to start paying it back, interest will increase by 1 per cent plus any increase in the RPI each year. So even if the RPI falls at any time, charges on the government loan will still increase by at least 1 per cent, which on a £40k loan is at least £30 a month more each year. This ever-increasing cost is something potential buyers need to be aware of and prepared for.
It is therefore vitally important that advisers make it clear to their clients looking to use Help to Buy that the loan is not interest-free indefinitely, and make sure they are in position to put money aside to prepare themselves financially for when the loan does need to be paid back.
Not all lenders will lend on Help to Buy, which means that when a client does come to the end of their deal, their options may well be restricted. This, combined with the rising costs of the government part of the loan, means clients need to be cautious.
Advisers need to ensure their clients are familiar with the lenders who will remortgage a Help to Buy deal, so they can help their clients to remortgage if need be.
You could fall into negative equity
We know that house prices fall as well as rise, but due to the structure of the Help to Buy loan, there is a risk of negative equity.
There is speculation that Help to Buy has inflated house prices, and that those on the scheme have paid more for their new builds than they are actually worth.
This means if house prices fall, there could be Help to Buy borrowers in negative equity. As first-time buyers quite often move after two or three years, this could cause real problems, especially if these borrowers come to the end of theirdeals and find their LTV has actually increased.
There is also the issue that homes bought new using the scheme are competing with new builds, making it harder for their owners to sell, possibly forcing them to drop their asking prices.
Your home is not 100 per cent yours but you are responsible for it
With a standard mortgage, the lender’s charge only covers the amount owed, with the borrower retaining any additional equity at the point of sale.
With Help to Buy, advisers need to make it clear to clients that the government has a charge for the initial 20 per cent borrowed but will also benefit from any rise in the property’s value, even if this is due to improvements the client has made and paid for.
Advisers also need to make clients aware they will need permission to make any substantial improvements to the property and will pay 100 per cent of the cost of those improvements, but only receive 80 per cent of the profits.
You cannot rent the property out
One of the stipulations of a Help to Buy loan is that you cannot sublet it, something, Dave Miller warns, many people are unaware of.
“If a couple who both own their own homes decide to move into together, it would be quite sensible to move into one property and keep the other one as an investment and rent it out.
“But, if that property was bought through Help to Buy, subletting it puts the owner in breach of their loan agreements. The only way a Help to Buy can be rented out is by repaying the Help-to-Buy part of the loan.”
So is it worth it?
The expectation was that the borrowers’ wages would go up, or the value of their home would increase, or both, leaving them in a position after five years to either pay off the government part of the loan in full or start paying back the loan on top of the rest of their mortgage payments. But for many it may not have worked out like that.
Many houses bought on Help to Buy schemes have not increased in value as much as the owners may have hoped, while some have actually dropped in value, often because the original prices were inflated.
We have also seen wages stagnate, inflation rise and interest rates may rise soon, which means not only will those on Help to Buy see their government loan due for repayment, but could see their monthly mortgage repayments rise too, a double whammy.
The Help to Buy scheme has seen lots of first-time buyers taking on a huge financial commitment, thinking their financial position would improve by the time the first payments were due, but five years down the line some are now finding they are not quite where they wanted to be and this could start to cause affordability issues.
Nevertheless, the scheme has been very useful, and many first-time buyers who otherwise would have not been able to get a foot on the property ladder have done so.
Advisers need to ensure any client looking to buy using the Help to Buy scheme is fully aware of all the pros and cons and that their situation suits the scheme. Once a client is on the scheme, advisers should be contacting them at least annually to ensure they are making preparations forthe future.
We do not want to end up in an interest-only mortgage situation, with customers burying their heads in the sand until it is too late.
Housing developers must reassure buyers that their new home will have a digital connection “fit for the 21st century” before completion, council leaders have said.
The Local Government Association (LGA) said developers must adopt council proposals for a new Fibre to the Premises Kitemark alongside their obligation to connect water and electricity before a property is sold.
Fibre to the Premises connectivity (also known as FTTP), where optical fibre is run all the way through to the premises, typically provides download speeds of up to 1Gbps as well as high upload speeds.
Analysis by the thinkbroadband comparison site suggests that just 32% of properties built in rural England last year are connected by FTTP broadband, while 17% are unable to achieve the Government’s broadband universal service obligation’s minimum download speed of 10Mbps and upload speed of 1Mbps which it aims to deliver by 2020.
Mark Hawthorne, chairman of the LGA’s People and Places Board, said: “Connecting our rural residents to future-proofed, fast and reliable broadband is vital to helping them get on in life and benefit from the advantages that decent digital connectivity can bring.
“The standard of digital connectivity we provide to our new-build homes should reflect our national ambition to roll out world-class digital infrastructure across the country.
“Residents will no longer tolerate digital connectivity taking a back seat in developers’ plans.
“We call on the Government, homebuilders and the broadband industry to work with us and develop the details of this proposal and give homebuyers the confidence to invest in a new home, knowing they won’t be stuck in the digital slow lane.”
Building what would be the fourth new housing development in a Nuneaton community has caused fury among residents.
Weddington’s ability to cope with demand for new school places as well as the impact on the roads has once again been the biggest concern aired by readers following the news that Gladman want to build up to 775 homes on land off Weddington Road.
Telegraph readers took to social media in their droves to react to the news of the development, which would be the fourth new one in the area.
What readers had to say
The plans were described as “utter madness” by Weddington ward councillor Keith Kondakor and it was a sentiment shared by Andrea McDonnel l on Twitter, who said: ” Absolutely agree! How can the current infrastructure cope?! Children struggling for schools, waiting times for doctors and sitting in queues of traffic to get to and from work #madness.”
On Facebook, Nick Groot Smith said: “They need to sort the town access out before any more homes are built.”
Liam Dunn wrote: “Wanna build more houses, yet you can’t fill potholes properly!”
Kerry Orton posted: “Have we not reached the housing target for the next ten years already? Surely we can’t be far off! And any sign of an approved Borough Plan yet?”
While Dan Holdaway said: “How? There is no way to widen the roads in a heavily built residential area? The roads will not change.”
Christopher ‘Suggsey’ Smith posted: “Yet more well used footpaths and bridleways in the countryside to be swallowed up by another development on green belt land. Time for everyone to say no, enough is enough!”
Gladman has said that, at the moment, the plans are in the very early stages and the leaflets sent out locally form part of their consultation before they officially submit the proposal to Nuneaton and Bedworth Borough Council .
What is known is that, at the moment, the latest round of inspection is taking place into Nuneaton and Bedworth Borough Council ‘s crucial Borough Plan, which maps out where houses can be built over the next 15 years.
Until the government inspector decides if the plan is ‘sound’ and fit for purpose, the council has little defence in the face of applications for housing developments.
The number of conversions of farm buildings into new homes dropped 20% in the last year, denting hopes that these conversions could help solve the rural housing crisis.
According to Lendy, one of Europe’s largest peer-to-peer lending platforms, only 1,511 agricultural-to-residential conversion applications were approved in 2016/17.
This figure is down from 1,890 in 2015/16. Lendy adds that local authorities rejected 38% of all applications for converting farm buildings to houses last year.
It says converting outbuildings such as barns and stables into housing can be an “effective” way of combating the UK’s housing shortage, which is being felt “just as badly” in the countryside as it is in cities.
For example, a recent development of eight new houses in rural Cornwall had over 800 people apply to rent, demonstrating the demand for more rural housing.
As well as making unused buildings available for new housing, selling surplus outbuildings to convert can provide farmers with a vital source of additional income, according to Lendy.
Lendy adds that in addition to the fall in applications and high number of refusals, another issue for developers is that bank lending to property developers remains low.
It says many developers can “struggle” to finance conversion projects through traditional means.
Bank of England figures show that in December 2013, over £34 billion in lending was outstanding from banks to property developers, but this plunged to just £14.8 billion in December 2017.
As a result, more and more developers are turning to alternative forms of finance, such as peer-to-peer lenders, to build more homes.
Liam Brooke, Co-Founder of Lendy, says: “Converting farm buildings is one of the easiest ways to help solve the rural housing shortage, so this sharp drop-off in approvals is very disappointing.
“Agricultural-to-residential conversions can be a win-win for everyone –farmers can unlock capital from their land and more homes get built for prospective buyers – helping to close the housing gap.
“It doesn’t make sense to have so many redundant outbuildings that have no aesthetic value at all slowly decaying when they could be turned into homes.”
Two sets of plans that could together bring about the construction of more than 350 new homes in the East Riding are set to move forward following positive decisions at the council’s latest planning committee meeting.
Plans from Persimmon Homes (Yorkshire) and Hull and EY Hospitals NHS Trust cover development off Castle Road in Cottingham. The reserved matters application covers siting, appearance and layout.
The scheme proposes the construction of 180 houses, with a mix of two-, three- and four-bedroom properties.
It also includes the creation of access roads, and the provision of parking, landscaping and public open space.
Outline planning permission for a wider scheme comprising 600 houses, care home, retail, healthcare facilities and sport pitches was granted in November 2013.
The latest plans went before East Riding of Yorkshire Council’s planning committee on 15 February. Councillors at the meeting voted to approve plans, subject to the completion of the Section 106 Agreement.
Also considered at the meeting were plans submitted by Spawforths, on behalf of the applicant, for a site to the west of Howden Parks.
The outline application proses the construction of 175 houses on a 22.1-acre site.
The site was originally proposed for housing in 1996 and formed part of the former Boothferry Borough Local Plan. It was also part of a hybrid application for 630 dwellings that was granted consent in 2014, but has now expired.
Councillors voted to defer a decision until an objection from the Environment Agency is withdrawn. Once this is received, the council’s director of planning and economic regeneration will be authorised to grant approval.
The analysis of Brownfield Land Registers reveals that over two thirds of these homes could be deliverable within five years, and many of these sites are in areas that have a high need for housing.
CPRE found that the 17,656 sites identified by local planning authorities, covering over 28,000 hectares of land, would provide enough land for at least 1,052,124 new homes, which it says could rise to over 1.1 million once all registers are published.
According to CPRE, this means that three of the next five years’ worth of government housing targets could be met through building on brownfield land that has already been identified.
This would ease pressure on councils being pushed to release greenfield land, and would mean that less of the UK’s countryside would be used for new builds.
London, the north west, and the south west were identified as having the highest number of potential deliverable homes, with the new registers giving minimum housing estimates of 267,859, 160,785 and 132,263 respectively.
The registers found sites for over 400,000 homes that have not yet come forward for planning permission, despite the “urgent need” to move sites towards development.
More than a third of these sites are on publicly owned land, and CPRE argues that as public authority developments should give a significant opportunity to provide affordable homes, it provides an opportunity for homes to be built on brownfield land to help towards local need.
Additionally, further analysis showed that there is brownfield capacity wherever there is threat to the green belt.
It found that in a number of areas with an extremely high number of green belt sites proposed for development, local authorities have identified enough brownfield land to fulfil up to 12 years of housing need.
Rebecca Pullinger, planning campaigner at the Campaign to Protect Rural England, called it “fantastic news” that authorities have identified so many brownfield sites that are ready to be developed.
She said: “Contrary to what the government, and other commentators have said, brownfield sites are also available in areas with high housing pressure.
“Indeed, our analysis is conservative with its estimates of potential number of homes that could be built – the figure could much higher if density is increased and if more registers looked at small sites.”
She called on the government to amend its guidance to ensure that councils have identified all of the brownfield sites in their areas, and to improve incentives to build on these sites and ensure that they follow through on their commitment for all new builds to be on brownfield first.
In order to make use of suitable brownfield land, CPRE has called on the government to use the upcoming review of the National Planning Policy Framework (NPPF) to introduce a “brownfield first” approach to land release and granting planning permissions for development.
It argues that local authorities must be empowered to refuse planning permission for greenfield sites where there are suitable brownfield alternatives.
The 13-acre site off Darkhouse Lane, near Rosewood Primary School, will be turned into a new housing estate.
Around 142 properties would be built comprising of 30 one bed flats, six two bed flats, 51 two bed houses, 45 three bed houses and 10 four bed houses.
Plans are set to be approved subject to a Section 106 agreement at a Dudley Council meeting next week.
Planning documents state: “The site is predominantly brownfield, being occupied by vacant, derelict and dilapidated industrial buildings.
“The development would also include open space and ancillary works to provide a buffer to adjacent industrial/railway uses.
“The application is made on behalf of Accord housing association and it is proposed that the entire scheme would be for affordable housing.”
Dudley Council leader Patrick Harley said if the scheme went ahead it would be ‘a boost’ to the local area.
“I welcome any investment in the borough as the council has been through hard times in recent years. We need to create our own new revenue streams and we can do that by building more houses and collecting more business rates.
“If there is an opportunity for commercial properties that would be great, and homes are good as well. I think this will provide a boost to the local economy in Coseley.”
A design and planning statement submitted as part of the application states: “Despite the site being allocated as employment land it must be noted the site has remained vacant for some time now and is subject to anti-social behaviour problems during the evenings.
“It is understood Dudley Council have expressed a willingness to consider the site’s potential for residential development.
“The design of any proposed residential development must be orientated to address the site constraints highlighted.
“The railway line to the west and coal manufacturing plant to the north have been identified as major potential noise sources.
“And early noise assessments suggest a minimum 60-metre offset of built form from these boundaries.
“This will achieve a substantial amount of public open space that will benefit any residential development and also provides sufficient space for the incorporation of a sympathetic noise mitigation feature.”
A previous application in 2013, from Darkhouse Properties (Jersey) Ltd, for 108 properties, was approved, but no development took place.
ITS approach to care was then revolutionary, and an entire village complex was supported by a working farm, church, shop and bakery before the rural idyll for vulnerable people was left to became a crumbling folly.
Now the former Bangour Village psychiatric hospital site in West Lothian –the size of 100 football pitches and including 15 listed buildings – is set to be taken over by a housing developer after lying empty for 14 years.
NHS Lothian, has a planning application going through the system for 891 homes, 800 new build and 91 conversions, and a primary school.
It is the second attempt to lay foundations for new homes there after an earlier effort fell victim to the economic downturn.
Allanwater Homes, based in Bridge of Allan, would not comment on its plans for the site but confirmed it has lodged a bid with owner NHS Lothian and that dialogue was ongoing.
It comes after renewed efforts were made to sell the site last year.
NHS Lothian, advised by the Scottish Futures Trust, appointed property advisers CBRe and Justin Lamb Associates to revive interest ahead of a planning decision through West Lothian Council.
Justin Lamb said Bangour is “probably the best opportunity in Scotland to deliver a new village in a mature landscape.”