Building Sustainably – Profit Vs Conscience
Your primary residence is likely to be the single biggest purchase in your life so what do you take into account when deciding where to live, Ofsted ratings of nearby schools, transport links, friends and family, nearby leisure amenities and work life balance? Ben Cussons, Business Advisory Partner examines the choices we have to make when looking for a place to call home and explores the various factors that influence our decision.
What if, as society shifts, we are more focused on the carbon emissions involved in constructing our homes and whether or not the homes is “green”?
Developers will assess the viability of a project by working backwards from what they anticipate the properties to sell for and deducting from this the costs to build, cost of land and general overheads. If the final figure that comes out doesn’t generate the wanted return, they will either revisit the plans or put them on hold. Land prices aren’t going down either and the open market will dictate what a property eventually sells for so the only part under a developer’s control is the cost to build and this is understandably where their focus lies. According to the World Green Building Council, approximately 40% of the worldwide carbon emissions are attributed to the construction of buildings and the energy needed to run them. World Business Council for Sustainable Development state that there is a 1% to 12% increase in costs to build green.
The housing market is already fiercely competitive making it difficult for first time buyers to get on the ladder. In the budget we saw the Chancellor announce the introduction of 5% mortgages for first time buyers in a bid to help, so a 12% increase in property prices to help enable builders to make the homes they build more sustainable would make purchasing a first time home even more unachievable for many. So should the government subsidise the building of sustainable homes as part of their plan to be carbon neutral by 2050? It is unlikely that a developer will seek to build in a more environmentally way focusing on their carbon footprint or sustainability of the materials used, whilst having a negative impact on their bottom line, but some will of course. What is changing is the way we power our homes with a shift to being more energy efficient, with air sourced heat pumps and renewable energy, partially driven by rapidly increasing energy prices over the last few years, but even that needs weighing up with the costs of install or conversion against pay back periods derived from ongoing costs savings.
I personally don’t think we are at that point yet, but it is certainly something to bear in mind.
Property developers, like any business owners, aim to generate a profit and do that by maximising returns on the individual dwellings or a development on the whole. To do this they will want to build as cost-effective as possible, whilst maintaining the quality of the delivered product to market. With a national housing shortage well documented and the costs of materials and labour at a premium, albeit they have reduced from the highs experienced in 2021, a developer will be very conscious of the costs of construction and the expected return and profit on sale.
8 | SCRUTTON BLAND | P R O P E R T Y A N D CONSTRUCTION
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