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HCA flexes muscles on new home design
Housebuilder – May 2010

The Homes and Communities Agency wants to see all homes in which it has some involvement built to new and higher space, design and sustainability standards. But housebuilders are not sue this has been properly thought out. Mark Smulian reports

Money is power, and right now the Homes and Communities Agency has lots of it compared with private investors in housebuilding, which makes its policies important for builders. Thus the industry had to pay attention when it began a consultation, just before the general election was called, on the space and environmental standards required in its homes.

flexing muscles

The HCA is flexing its muscles to influence the design and sustainability of homes, and this goes beyond affordable homes. Core standards will apply, the HCA proposes, to all new homes from April 2011 (with a few exceptions such as those purpose built for people with special needs) where the agency is providing grant funding through the National Affordable Housing Programme, where it has facilitated or provided free or discounted land or where it has facilitated or funded major infrastructure as part of a regeneration project. "Facilitated" is not defined, and it would seem safest to assume that it means any project in which the HCA has any involvement. The only stated exception is private homes built on the same site as social ones without any HCA support.

So, what is the problem? The aims of the standards are laudable (see box) and the HCA insists they can be achieved "at reasonable cost, while providing exemplars, and therefore best practice and learning, to disseminate to the wider public and private sector", a spokeswoman says. But on any given site, if homes are larger than normal there must therefore be fewer of them. That means the homes must either command a higher price that will cover the cost of providing extra space - an idea regarded by the Home Builders Federation as highly questionable - or the builder must be able to buy the land for a discount. At a time when public spending will be under the cosh it must be equally questionable whether the HCA will accept less for its land. A further problem lurks behind the HCA's hope that the standards "will encourage our partners and the sector to join with us and follow our lead". The logical end of that could see the standards enforced through Building Regulations or planning requirements even on homes with which the agency has no connection.

HBF head of external affairs John Slaughter says his concern is that the impact of this would be more wide ranging that it at first seems, affecting a large number of homes. "It would apply, potentially, to any project that uses publicly-owned land or receives any funding from the HCA so it extends to purely private developments where there is an HCA site involved, or even, I suppose, to something that uses HomeBuy Direct funding," he says. He says the alternatives of higher house prices or lower land prices are "an issue for not just our members but for the government too and it has got to be faced up to. The consequential effects on development viability affects the equation of what you can deliver on a partnering site." Slaughter dismisses the argument that larger homes with better environmental performance can command higher prices.

"The reality is that the market does not behave like that in the UK, where people do not buy on space, but if anything on the number of rooms," he says. "You can argue that that is a dysfunctional market but it will not change overnight." All this would be less of an issue for builders had the recession not made them more dependent on the HCA. "It is quite important for the whole industry because so much is reliant on the HCA at the moment, and it is a factor that will impact on the negotiations and the price to acquire an HCA site," Slaughter says. "Beyond that there are wider concerns that these standards could spread from affordable housing through Building Regulations or planning requirements a bit like the way the Code for Sustainable Homes has." Bob Weston, chairman and chief executive of Weston Homes, says the standards will cause a real problem for all housebuilders and home buyers alike. "Imposing these changes to building standards will only serve to create an even greater shortfall in new homes over the coming years," he says.

"It will not be possible to meet all these demands and still deliver the required numbers of homes." Weston thinks that building a home should be between the builder and the buyer without government intervention. "If you compare the size of homes that Weston Homes are building today to the average properties built 25 years ago, they are in fact 30% larger so why is there a need to change the standards?" Steve Trusler, strategy director of Wates Living Space, says the firm is building homes for RSLs and local authorities so has had to build to higher standards for quite some time. "Higher standards are a good thing, and they are likely to come in through the Building Regulations anyway sooner or later, but this pushes the agenda faster. Wates does build speculative units and I have no issue with space requirements as long as you know that they are part of the deal you have structured and you can take that into account."

who pays?

Banner Homes' affordable housing manager Andrew Pennell says his company has yet to buy an HCA site for private housing but could conceivably do so, and would then have to reckon with the standards. "It could apply to private housing there, but who would pay? I don't know if people would pay more for more space and higher environmental performance or that even if they did it would be enough to cover the increased costs," he says. "As a builder of private units we'd be concerned if these standards started to become expected through Building Regulations or planning because it means less flexibility and we do not have standard types, we design for each site, "If we bought an HCA site we would go in with eyes wide open and their constraints would be factored into the deal, and we'd judge what we could pay for it."

Viability also concerns Stephen Teagle, managing director for affordable housing and regeneration at Galliford Try, who points out that if a site has to have fewer but larger units "the cost of that has to come from somewhere and I think it will be reflected in the price paid for the land". He adds: "It will therefore depress the price the HCA can command for its land and it needs to be aware that it will get fewer homes built. I don't think it will affect the attractiveness of HCA land, just the price." Two government objectives could thus be at stake depending on what the HCA eventually does - there could be fewer new homes built and a lower return for selling public land. Introducing his consultation, HCA chief executive Sir Bob Kerslake wrote: "The HCA is about the creation and renewal of great places, where people enjoy living, working and socialising.

"Our resources are limited, but our ambitions are broad. We must therefore ensure that all of our investment is lasting, which means promoting quality homes and places that will stand the test of time. " He said that the proposed standards rationalise those inherited from the Housing Corporation and English Partnerships, and in that respect at least they should simplify life for builders. "The evidence base that underpins this consultation exercise is clear about the cost of potential options for new core standards," Sir Bob wrote. "We should also recognise that these costs will reduce over time as the industry learns and innovates." Someone though has to pay for higher standards, and builders will hope it won't be them.

The proposed standards

minimum dwelling space criteria incorporating minimum storage provision;

internal room size benchmarks with the sum of the proposed room sizes equal to or greater than the sum of the benchmark sizes;

minimum of Code for Sustainable Homes level 4, and with maximum credits for security;

minimum of 14 out of the 20 Building for Life criteria achievable.