Everyone will be hurting from the chaos coronavirus has caused but those living in social housing will be among the worst affected. The global recession triggered by coronavirus is predicted to be one of the worst in modern history, between April and June of this year alone the UK economy shrank by over 20%.
Housing associations, therefore, need to be smart and find new ways to reduce operating costs in order to ease financial pressure for their residents. Alongside saving money there are big sustainable wins to be gained.
We have compiled a list of proven practices and strategies that social landlords can adopt in pursuit of this aim.
The introduction of Alok Sharma’s Green Homes Grant has reignited the conversation around heat efficiency in UK homes. While the scheme is currently aimed at private home owners, Rishi Sunak’s speech comes alongside a document promising a separate fund due to arrive in 2021.
The Social Housing Decarbonisation Fund will start with a £50m demonstrator fund in 2020-21. It will target the least energy efficient homes with retrofits to wall and floor insulation in a bid to reduce unnecessary energy use and carbon footprint.
While 2021 might seem a ways off, it will serve landlords to be prepared and start shopping around now for a government-approved contractor to perform these upgrades should the fund be available to them.
35% of total heat loss in homes is through the walls of the structure and just 50mm of insulation can reduce that loss by 75%. Evidently, regardless of eligibility for the fund, improved insulation represents a massive savings opportunity.
Small-scale solar arrays are not a new innovation within social housing. In 2017, Wales’ largest social landlord Pobl secured planning permission to fit sixteen of its properties with roof-mounted solar panels.
The obvious benefit of integrating power generation into your structures is that they can off-set energy costs by reducing demand to supplier. In some cases it may even be possible to sell excess energy generated back to the grid using a feed-in tariff.
Not only does this serve tenants financially, it also puts property owners in good stead for demonstrating active engagement with their carbon footprint. Finally, this can also provide piece of mind to residents in the form of energy security independent of the main grid.
Returning to the subject of heat, it has been long accepted that, in theory, communal heating schemes are cheaper, greener and more energy efficient than individual heating systems. While the cost of installation has previously been prohibitively expensive, government-led support for these technologies means that this is no longer the case.
The Conservative manifesto of 2019 has pledged £6.2bn in funding to install energy saving measures in homes, schools and hospitals with a specific focus on social housing.
When managed effectively, district heating schemes have been shown to reduce energy demand for heating by up to 30%. In addition, a 2017 Heat Networks Consumer Survey showed that customers using heat networks paid £100 less per year compared to those with gas boilers.
Smart meters relate closely to heat networks since the two work extremely well in tandem to each other.
A BEIS funded-pilot enjoyed huge success back in 2018 wherein three separate housing associations augment their district heat schemes with smart meters. Guinness Partnership, Network Homes and Octavia used smart meters to improve the efficiency of their pre-existing heat network setups.
Armed with more robust and current data sets Guinness (a client of Monarch) and Octavia made reductions in heat loss on their chosen sites of 75% and 68% respectively and thereby collectively saved their residents thousands of pounds per year.
However, smart meters also arm landlords with comprehensive consumption data that can be used in overcoming other challenges such as inaccurate billing.
A natural counterpart to smart meters, building management systems double down on the automation and digitisation of utilities management. Where smart meters offer unfaltering record keeping, building management systems afford the ability to tailor utility usage on a room-by-room basis according to resident needs.
Given the effect of air quality, temperature and humidity on our ability to focus and concentrate, freedom to control those elements will become as valuable in a domestic setting as it already is in a commercial one as home working increases.
This is to say nothing of the profound health benefits that maintaining atmospheric conditions can promise residents. It is well documented that building management systems are exceptional drivers of energy efficiency, offering average savings between 15-20%.
Comprehensive and ongoing bill validation is especially important regarding older sites or portfolios that have changed hands several times. This is because organisations often inherit their invoices from the previous owners and can sometime find themselves paying for energy that they have not consumed.
Monarch has extensive experience in providing oversight and consultation on the utility bills of housing associations. In so doing, it has discovered that approximately 1 in 5 invoices contain errors. While the task of financial management of all bills, particularly in large and complex portfolios, can be a daunting prospect, outsourcing the work can yield all of its benefits whilst mitigating the time commitment required to do so effectively.
In negotiating refunds on such invoicing errors, we have secured over £130m for its clients since 2006
Perhaps the greatest tragedy that can befall a property owner, is that of property sitting disused. However, there is no reason that such a site should incur unneeded costs during that time.
The likelihood of void periods in housing portfolios will also increase exponentially as schemes like the Social Housing Decarbonisation Scheme gain momentum. Residents will often elect to temporarily vacant properties while extensive renovations like insulation retrofits are taking place.
Proper management of void properties means that landlords will not be tied into gas and electric bills while the property sits empty, nor will tenants return to a nasty shock when they decide to move back in.
No organisation exists in a vacuum and while accountability for energy efficiency begins at home, the wider energy landscape must not be neglected. Below are two suggestions on how to effectively engage with energy in a national context.
Generally speaking, housing associations are more restricted in the types of energy contracts that they have access to. Being limited to fixed-term energy contracts could prove problematic in the months to follow lockdown due to unpredictable consumption patterns and the charges suppliers will levy to mitigate any losses as a result.
Fortunately, if housing associations are willing to collaborate with one another, Section 20 dispensation can liberate them from fixed-term contracts and allow them greater autonomy within energy purchasing markets. As the UK pumps more funding into renewable technology, the ability to adapt to a changing energy market will become vital to reap its greatest rewards. Leading us neatly into our penultimate piece of advice…
Tomorrow is green, with massive investment in solar, GSHP (Ground Source Heat Pumps) and offshore wind, green energy will inevitably grow cheaper over time.
Eventually, when adequate infrastructure is in place, the costing scale will tip forever in favour of renewable energy production. Already electricity costs for concentrated solar and offshore wind power have fallen by 47% and 29% respectively between 2010 and 2019.
In the UK, wind power now costs approximately 0.03-0.05p per kWh in the wholesale market compared with its fossil fuel equivalents that stand between 0.05-0.13p for the same amount. The numbers are decisive, and the cost difference will only become more pronounced as time passes, meaning that the best time to switch to a renewable supplier was last month but the second best time is today.
The government’s new Green Deal carries several benefits for residents and so can serve as a foundation for a collaborative sustainable culture between landlord and resident.
An initial assessment is required to qualify and while the assessment is not free, the company in question is required to provide costing before going ahead and the benefits are myriad before residents even engage with the deal itself.
Property owners that undergo assessment will receive an EPC (Energy Performance Certificate) as well as an occupancy assessment that determines how much energy residents are consuming.
Additionally, the report will provide recommendations on energy performance improvements that could be made as well as an estimate of annual savings that could be made by enacting such improvement.
The report is valid for 10 years or until structural or energy savings changes are made to the property. This element is why we mention green assessments last as such a report should ideally be secured after any other improvements to a portfolio have been completed.
Empowered by these suggestions it is clear that there are myriad opportunities for property owners to make substantial savings to operating costs, improve energy efficiency across their sites and foster a reputation for sustainability. As such, now is the perfect time to talk to us. Monarch offers a comprehensive invoice validation service to over 200 housing associations across 65,000 sites.
Additionally we provide consultancy on Section 20 dispensation as well as an ongoing contract procurement services to help housing associations take advantage of this new found freedom.
Finally, our partnership with SSE can help offset the maintenance costs often incurred by void properties while providing a seamless and simple transition service from one tenant to the next.