This Could Be Home

“It seems obvious: the reason only a tiny percentage of new…buildings and retrofits aren’t green isn’t cost. It’s lack of ingenuity or knowledge of new construction techniques — architects and builders wed to the ‘same-old,’ lenders leery of anything unconventional.” – Sustainable Energy Africa

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Sign the petition or get involved here.

The Scottish Greens have launched our new #ThisCouldBeHome campaign aimed at greatly strengthening the current movements towards better land reform.

There are currently around 11,000 hectares of land in Scotland current derelict or un- or underused which, through the application of a Land Value Tax, could be freed up to build a new generation of affordable housing. Here is Andy Wightman introducing the campaign.

As the campaign points out, the current UK housing bubble is pushing rents up beyond the affordability of far too many people and those increasingly fortunate few who can scrape together a deposit and have secure enough employment to sustain a mortgage are looking with trepidation towards the day that the Bank of England starts pushing interest rates back up towards pre-2008 levels. For hard pressed people who can barely afford to pay the bills as it is, moves like this could result in yet another crash in the housing market and more families facing default, foreclosure and eviction.

We also live in a country with the second highest level of excess winter mortality of any European country north of the Alps, driven in large part by our lax building standards and fuel poverty.

For this reason, we should take this opportunity to ensure that those new houses which are built adhere to strict building regulations which push the limits of our technological abilities to ensure that energy bills and the other ongoing costs of running a building are kept at an absolute minimum. Of course, buildings are themselves often constructed to meet only the very minimum standards set by law as to do otherwise would eat into the private construction industry’s precious profit margin.

Of course, as the headline quote states, cost isn’t nearly the greatest obstacle to greener housing development and, as I have written previously, the Scottish government will soon be handed the power to borrow money far cheaper than can any bank or private company (As an alternative, the Common Weal has also pointed out that the Government has the power, today, to set up Scottish Housing Company to perform the same function) and could use that money, paid back through rents, to undercut the private industry and ensure that the highest green standards are adhered to. The precedent for this already exists in Scotland where, according to official government figures, the social rented housing stock are generally more energy efficient than private builds and contain a higher percentage of B and C grade housing (where the overall Scottish average is merely grade D). If we are willing to push things as far as we need to to reach a zero-carbon economy then a greater pool of cheap, efficient housing will force the private sector to either step up its game or step aside.

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A Thermal image of an energy efficient “Passive House” compared to a more traditional, less well insulated dwelling behind it. Source: Passivhaus Institut

But how do we get everyone to A grade? One pathway can be found in the Passivhaus Standard which employs a strict understanding and approach to engineering and techniques such as solar thermal panels on roofs, underfloor ground source heat pumps, insulation throughout the house and architectural elements designed in from the start to minimise heat loss and maximise the amount of energy which can be harvested from the environment. Properly employed, these standards reduce a house’s heating requirements to below 15 kWh per square metre per year. By comparison the average Scottish house requires approximately 140 kWh per square metre per year to keep it warm. It’s no wonder so many of us struggle in winter. (Fun fact about Passivhaus, they have built a compliant dwelling now on every continent on Earth. Including Antarctica!)

With heating making up 55% of Scotland’s overall annual energy demand and only 10% of that heating coming from renewable sources (including renewable electricity) then it is clear that this is the area which, if targeted, will have the most potential to reduce our requirement to run a carbon based economy. This needs to be stressed. Whilst the Scottish Government has made great strides in pushing renewables (and despite the UK government’s increasingly hostile attitude towards them) if we only focus on meeting of our current electrical demands then we’ll still be reliant on fossil fuels for over three quarters of our energy and this doesn’t factor in the doubling of electrical demand which will come if we translate our transport system over to electric vehicles (assuming we don’t also reduce demand there too).

To achieve this may seem to require brave choices. But we can’t sustain the “same old” attitude for much longer. Pretty soon, doing nothing will be even “braver” (in the Yes Minister sense). I believe that a strong Green voice in the Scottish Parliament from May will help the government make those brave choices and your vote for the Greens in May will help that happen. As noted earlier, it’s not a problem of money or power holding us back here. Merely the will to roll up our sleeves and do it. We’ll be glad for it once we have. We’ll wonder why we didn’t do it sooner.

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We Need To Talk About: Local Taxation

 

Council

Source: Flickr

Next year brings in the Scottish Parliamentary Elections and with it comes the proposals from each of the parties on how best to use the limited powers that the Scottish Government will have at its disposal. No doubt, much of the news and comment will be around whether or not the (marginally) expanded powers over income tax coming in under the Scotland Bill 2012 will be used and by how much.

Our approach towards local taxation, however, will perhaps lead to a far more fundamental change to the fabric of our society. There is also far greater scope within the devolution powers to do something a bit more radical that simply raising or lowering the rate of tax by a penny or so (or repeatedly defending one’s reasons for not doing so). It is therefore important, before the campaigning season begins in earnest, to understand what our options are and the potential impacts of them.

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How to Make Housing Affordable

Tenementhouse(Image: Tenement House, Glasgow. Source: Wikipedia)

Housing is always a touchstone issue during election campaigns and this one is most certainly no different. Two of the most oft-quoted in the manifestos this time round are: “How can we build “Affordable Housing”?” and “How can we afford to build them at all?” It seems strange that we are quite content to allow banks to borrow, or even flat out create, the funds it requires to supply us with a mortgage for a house but it is almost anathema for a government to do something very similar. I am going to make the very simple case that we need to dispense with this illogical paradigm and start looking at how to build a stable, long term housing policy fit for purpose.

For the purposes of this exercise I looked at a couple of example mortgages available from the commercial banks today. One typical one offered me a £90,000 mortgage with an initial interest rate of 4.2% fixed for 2 years. Assuming that that rate didn’t change over the 25 year term of the mortgage I would be faced with paying £485 per month for those 25 years until the loan was paid off. The total amount repaid (discounting inflation) would be just over £145,000. Given that we are currently experiencing historic lows in our interest rates and that they are unlikely to drop further this gives us the lowest bound to the repayment. Add in, on top of that, the profit margin demanded by a private landlord and the costs soon mount up rather staggeringly. It really is no wonder that many of the UK’s richest people are in the property market.

But what would happen if the Government borrowed that money instead and invested it in a social house for me? Today, May 4th 2015, a 25 year UK bond attracts an interest rate of 2.515% (Source: http://uk.investing.com/rates-bonds/uk-25-year-bond-yield). The first thing to note is that this interest rate is guaranteed to be fixed for the entire 25 year term. There could be no uncertainty over the possibility of unaffordable interest rate rises of the kind which led to so much chaos during the 2008 crash. This opens the way to a long term government housing policy rather than the election-by-election tinkering we see now.

At this lower interest rate we could charge the same £485 per month and expect to have the loan paid off in full almost five and a half years early at a total cost of only £114,500, a saving of £31,000 or 21%. By having the government borrow for us, we can afford five houses for the price of four! Alternatively, the monthly rent could be cut by £80 per month and the 25 year term maintained whilst still undercutting any private landlords (even if they pass on their bank mortgage at cost).

What happens after the loan is paid off could be a matter for government policy. The rent could be maintained, providing the government with a ready and reliable revenue stream. Or the house could be granted at a discounted rate or entirely rent free to the tenant for the remainder of their occupation (with the house returning to the social stock once it is no longer required), or the rent could be reinvested into more housing stock to keep up with demands from population growth and (dare I mention that dreaded word?) immigration. The UK’s population is growing at less than 1% per year meaning that we’d need just one new house built every year for every one hundred in the stock. The rents from those hundred could easily accommodate for that level of demand. Our hypothetical £405 per month rent for 25 years is now just £410 per month, still greatly cheaper than our private landlord and we no longer need to worry about the costs of housing the next generation (wherever they come from).

Of course, many other questions still remain underneath this housing policy such as: where do we build these houses? (the old green belt versus inner city regeneration question), how do we manage (or tax) the land on which they are built?, what infrastructure do we build around them?, or how can we encourage business development in or near these areas to provide jobs for the residents. These are most certainly vital questions to be answered as part of a holistic and complete housing policy but one thing is certain. Neither your bank nor your private landlord concerns themselves with these questions. Even if none of them are answered within this article I believe that I have demonstrated that allowing a government to borrow to invest in our society need not be the terrible thing that some politicians would have you believe it would be. Surely, lining the pockets of the banks and landlords the way we currently are is the least effective, most costly way we could possibly be doing it? TCG logo