Balancing tougher regulations with housing delivery
Since the Grenfell disaster, building regulations and the relationship between social landlords and their tenants have quite rightly come under scrutiny. Among the recommendations made by homeless charity Shelter are strengthening the regulations, better standards for homes and improving engagement with tenants.
The results of the Building a Safer Future consultation and the Social Housing Green Paper are yet to be announced having been delayed by summer recess and subsequent shut down of parliament but it is clear that the existing system is lacking and that things will change. So, what might those changes be and how might they shape the market?
Current Decent Homes Standards are not hugely demanding for landlords and developers. For example, homes are required to be in a reasonable state of repair, thermally efficient and have reasonably modern facilities. However, the minimum standards of safety are complex.
“You need to be a rocket scientist to understand exactly how the categories of hazards work,” says Tonia Secker, Partner at Trowers & Hamlins.
"I would hope, what would come out of this exercise is that there is a more holistic system or standard for what is safe. Having one, more easily understandable set of principles to go to would be a good thing.”
Aside from a new set of standards to follow, one proposal under the Building a Safer Future consultation, is to have a series of gateway processes with sign off required for each before proceeding onto the next. For example, you wouldn’t be able to start on site until the new safety regulator has signed off that the project is safe and, residents can’t move in until the construction is also signed off as safe by the regulator. It would impact all new housing developments as well as affordable homes and the refurbishment of existing social homes.
Safety has to come first but more checks and procedures could put undue pressure on local authority budgets and resources which are already stretched. “We would want to know that the system is properly resourced and staffed and each sign off can be turned around within the timescales that we expect, otherwise the construction project will just grind to a halt,” says Katie Saunders, Partner at Trowers & Hamlins.
An unwanted side effect of more regulatory processes could be fewer homes getting built. Meeting housing targets is a Government priority, building safety is equally, but are current resources sufficient to deliver both? If it takes longer to get homes built and there are additional costs it could slow down delivery making housing targets more difficult to meet.
“On the one hand you’ve got money coming out of the business to meet improved safety standards and on the other hand, you’ve got the Government saying we need more houses. How do you resolve that tension?” says Secker.
Additional funding from central government may be required to ensure there are appropriate resources in place to manage and monitor new regulations and processes and not slow down housing delivery.
Modular housing may provide a partial solution to ensuring safety and quality standards while delivering at volume. With residential units manufactured off-site in a controlled environment and then assembled on-site, it is easier to monitor where materials have come from and test safety. There is a consistency and speed of development that you don’t get with regular house building which could help with meeting housing targets.
However, off-site construction for housing delivery as an industry is still in its infancy and currently can only top-up supply rather than deliver at significant volume. Interest from institutional investors and local authorities might help to make take modular homes more mainstream.
If new stages of process are introduced there is also the question of liability for each stage – who, ultimately, is accountable? The Government stance under the proposed Building a Safer Future consultation is that liability for the long-term safety of the residents should sit with the person who owns the building but that then raises the question as to who the owner is. “Conceptually you would think it ought to be the freeholder, but the freeholder may have no direct continuing association with the building, having granted leases to one or more occupiers, who may themselves have sub-let” says Secker.
It may be easier to apportion responsibility for the different stages of design, planning, construction and occupation to the public sector housing developers and landlords as they are responsible for the whole life cycle of a housing development and may occupy or maintain a whole building. If there is an element of affordable housing as part of an open market residential development or mixeduse it is more complex since there are different tiers of landlords rather than one overall landlord and consequently uncertainty over who takes overall responsibility for safety.
It won’t be until the exact nature of the regulatory changes and the process of approval is known that the full impact can be assessed. The results of the Building a Safer Future consultation and the Social Housing Green Paper are expected in the next few months.