By Keith Emmerson and Andrew Leslie, solicitors specialising in construction and housebuilding at Gillespie Macandrew
A lot has been written on the new Scottish National Planning Framework (NPF4), which will be adopted on 13 February 2023. However, another significant announcement for the housebuilding sector was announced shortly before. Patrick Harvie, Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights, announced that the Scottish Government would bring forward subordinate legislation within two years which would amend existing building regulations by introducing more stringent energy and environmental standards for all new-build housing.
The aim of the new legislation is to incorporate a standard similar to the Passivhaus standard, prevalent in other Northern European nations. A Passivhaus building aims not to use as much energy as a traditional building by being effectively sealed against the elements. The actual construction methods of Passivhaus buildings will vary but they will all have some features in common, including:
- Far greater insulation than found in typical Scottish properties;
- Triple glazed windows with insulated frames;
- Significant airtightness levels;
- Mechanical ventilation, with a heat recovery system attached to allow for re-use of heat within the building;
- Water heating from a zero-emission energy source such as solar power or air source heat pump.
The Scottish Government has not committed to adopting the Passivhaus standard wholesale, for the reason that the standard itself is controlled and certified by an independent body. Instead, they will look to formulate a bespoke standard which will incorporate many of the Passivhaus principles but without specific reference to, or certification of, the Passivhaus standard.
It remains to be seen how the new standard will work in practice. However, if we are to move towards anything like the Passivhaus standard, there will be significant implications for much of the housebuilding industry.
These include the requirement for the existing supply chain to supply products and materials which are potentially substantially different in quality and specification to existing building standards. It is estimated that building to Passivhaus standard could cost between 5-10% more than existing standards. Given the effects on the supply and cost of materials as a result of the Covid-19 pandemic, Brexit and the ongoing conflict in Ukraine, this is likely to add further cost pressures to builders.
There will also be a requirement for significant retraining across the industry so that builders are aware of what needs to be delivered in order to meet this standard, and certifiers are clear on what needs to be examined to ensure that the new standards are met.
All of this is scheduled to take place within the next two years, which is not a lot of time to formulate new standards, educate all parts of the industry on it and implement these changes. It is unclear at this stage what the Scottish Government feels can be added over and above the Passivhaus standard, which has been established for 30 years and has a significant body of work which would provide a clear, tried-and-tested standard to make adoption straightforward and allow for organisations to commence training more immediately.
The aim of the measures is admirable, both in the context of the current cost of living crisis and the wider climate emergency, however housebuilders will be concerned at the consistently shifting landscape in which they are required to do business.
Changes arising from NPF4, the ban on gas boilers in new build properties from 2024, together with the proposed Passivhaus changes will undoubtedly lead, at least in the short to medium term, to greater expense in a construction industry already suffering from spiralling costs and, ultimately, the price of housing rising. New build houses are already significantly more energy efficient than the country’s aged housing stock and it could be argued that funds and legislation would be better targeted at improving insulation on existing stock whilst encouraging a construction environment where new housing levels are significantly increased would go further to achieving green goals than targeting the new build housing industry.
Purchasers of new properties constructed to Passivhaus standard will, however, certainly benefit from energy efficiencies. At a time where the costs of energy have significantly increased the draw of low energy costs will be a benefit which housebuilders can use to their advantage and (provided the mortgage market continues to stabilise) should lead to strong levels of demand for new housing rising back to the very strong levels which have been experienced for the 18 months prior to 2022’s mini-budget.
There are therefore clearly benefits to be had for housebuilders and consumers alike, however it is critical that the legislation and construction standard itself is drafted in consultation with housebuilders of all sizes to ensure that disruption to the supply and costs of new build housing is kept to a minimum.
