Navigating the Future of Property Retrofit and Sustainability

Simon Meadows 00:00:09

Hello there, and welcome to Mortgage Introducer Talk. I'm Simon Meadows, and today we're in the company of Jonathan Evans, who is Senior National Account and new build lead at Skipton Building Society. And we're also joined by Jonathan Annan, who is a Chartered Surveyor and Director at Harvey Donaldson and Gibson Chartered Surveyors. Welcome to you both. Thanks for joining me.

Jonathan Evans 00:00:33

Thanks for having me back on Simon,

Jonathan Annan 00:00:34

Thanks for having us along, Simon.

Simon Meadows 00:00:37

Well, thank you both. It's really good to have you here. And of course, we have two Jonathans, so just to differentiate between you as we go through the discussion, I hope you will forgive us for using your surnames just to make it clearly speaking. So why don't we start by finding out a little bit about each of your businesses. Jonathan Evans, we come to you first.

Jonathan Evans 00:00:59

Yeah. Hi, Simon so Skipton Building Society was established in 1853 and our purpose is to help more people have a home, as well as making people's money work harder for them. And we've also got an objective to make Skipton building societies members, you know, make membership matter in terms of strategic objectives in the home business, the part that I work in, we want to support more first time buyers into home ownership, help them realize their dreams of home ownership, and we want to promote greener living. And then when you take a step back and look at the wider skeptic Group, we help nearly one in 10 people who buy and sell homes in the UK. So quite an impact in the UK housing market.

Simon Meadows 00:01:46

Excellent. Thank you very much. Jonathan Allen, if you could tell us about Harvey Donaldson and Gibson, Chartered Surveyors,

Jonathan Annan 00:01:54

Absolutely so Harvey Donaldson and Gibson have been around in one form or another in Scotland since around 1964 we are more laterally, part of the Connells and countrywide group, and ultimately part of the same corporate group of companies as Skipton Building Society. So Harvey Donaldson, Gibson's main business is the provision of secured lending valuations and valuation of residential property for selling purposes. So in Scotland, the single survey home report then, but we are ultimately

trading the of country weight surveyors in Scotland and country weight surveyors were probably more familiar to your listeners than Harvey Donaldson and Gibson so that that's that's that business.

Simon Meadows 00:02:34

Excellent. Jonathan Evans, I understand that Skipton has a fascinating new project to retrofit your properties if you've talked about that, please. And the thinking behind it.

Jonathan Evans 00:02:45

Yeah, so the sort of thinking behind it, when you look at a high level in the UK, the government's committed to net zero targets for 2050 so we need to get there as a nation. 1/5 of carbon emissions in the UK come comes from housing stock, and it's estimated that 27 million homes will need to be retrofit. And also, certainly, more recently, the government are now proposing the buy to let properties need to have a minimum EPC rating of C by 2030 so that's a sort of high level cut of the why, as a group, we feel we've got a responsibility, you know, to support our customers and members and to educate them on this journey. And the feedback that we're receiving from our members is that they are unsure on what to do to retrofit a property, and it's costly to do so. There's a cost of living crisis out there at the moment as well, and just generally that they don't know where to start and what order to do things. So we've got a property in Skipton, North Yorkshire. It's very close to the head office. It's called Regent road. The property's on regents road. So we essentially said, You know what, why don't we just do this ourselves? But we own a four bed detached property, the current EPC rating is D. Let's just do it ourselves and see what that what the outcomes are. So we're essentially documenting and sharing my findings with members. We're going to take them on the journey to highlight the highs and the lows, the challenges and the opportunities, and also sort of to share that the savings that we see once the project's been completed. And also think that there's also a part of consumer protection. There was a seminar this week, and I heard a representative from the green Finance Institute, and they essentially shared that there's now roughly 60 green stroke sustainable mortgage products on the market for customers to use, and that's only going to grow as we as we move further towards the 2050, target. So I think, as a prudent lender, and, you know, an a financial institution within the UK, I think we've we need to be careful, and we need to help customers, or, sorry, help. Protect customers, because, yes, the finance products are there, but what's the best way to use that finance to get your property upgraded? And that is why we have, you know, that's why we're launching the regions rod project, and we're also doing it in conjunction with some of our group companies.

Simon Meadows 00:05:19

Excellent, really, really interesting. I think I said properties. Are we talking about one property or a number of properties here?

Jonathan Evans 00:05:24

It's, it's one we do own a number of properties in Skipton, but this is specifically for, it's one property. It's the detached house that we have on regents road.

Simon Meadows 00:05:34

And who knows where that can lead maybe end up doing more properties. You know, if it's if it goes well, would be nice to think, wouldn't it turning to you, Jonathan Annan what role are you playing in the project? and what's your take on it? Tell us a bit more about the process and the standards to which you're working.

Jonathan Annan 00:05:53

No problem. So as well as being a doctor there, I'm a domestic energy assessor, and what's called a retrofit assessor. So our business in Scotland does a lot of work with social housing providers to decarbonize housing stock. And ultimately, being part of the skipping group, we were asked to come on board and in the first instance, give some advice around retrofitting properties going forward. And the Regent road project was an ideal collaboration, and to try and understand what value there was within the group, to basically get learning out there. So my initial role was that of a retrofit assessor, which basically somebody who goes into a property, inspects the property, reports back in the condition, and also provides basic data around the energy efficiency of the house as it stands, and then that's then used by people within the process. So basically, once the retrofit assessment has been done, that is then provided further down the line. But my thoughts on the project, I love it. It shows great innovation. It's not a natural process to go to a building society and ask them about, how do you improve a property? You normally associate financial institutions with providing lending, but if you could draw parallels with even the situation that Ireland, at the moment, they chose the post office to provide a one stop service for retrofit, so that there's kind of that disruption in the market, is something that I think Skipton have definitely gotten on to, and are basically trying to provide learning for their own members and the public. So it's bold, it's innovative, and I think it's going to provide an excellent learning platform for skipping group to basically provide value to its members and hopefully the rest of the UK. Because right now in the United Kingdom, the strategy around Retrofit is a bit disjointed. There's some fabulous people and companies working out there, but it needs to be brought together on the one strategy, because as Jonathan said, there's 29 million properties that need to be retrofitted for 2050 for the UK to hit the targets that it's legally committed to do for net zero. So in the context of the region road project as part of the whole process, as a retrofit assessor, you sit within a process governed by pas 2035 now, pas 2035 is a public standard. They're part of the British Standards Institute, and it basically covers the process of retrofit from start to finish. And it's all about de risking retrofit for any individual involved in the process, or any homeowner or council or social housing provider. Now it's quite a rigid process, but it does provide a good indication as to the risk points in retrofit, and tries to avoid bad retrofit. It's probably quite commonly reported in the media about instances where retrofits cause condensation, dampness, mold, so the past 2035, process basically de risks that process and enables the property to be retrofitted safely. So the standards, that's one of the standards that was we're trying to work to in the Regent roads project, just to enable people to understand how to do it. Because retrofit isn't rocket science, but it is complicated, and unless you have the de risking of retrofit, you can cause issues. So alongside past 2035, there are a whole suite of British Standards available to anybody looking to retrofit the property. The micro justification scheme also covers addition of heat pumps and other elements like that. And then going slightly further than that, if you want to look at the actual standard of retrofit property, you could look at standards like Enerfit, which your listeners may have heard of, passive house. Enerfit is basically the retrofit standard for passive house, so it's the kind of platinum standard for retrofit region. Road doesn't quite seek to meet that standard, but there are certainly elements of the design which touches on the benefits of that standard.

Simon Meadows 00:09:38

Excellent. That's really good. Thank you. Yeah, absolutely fascinating, and points very well made there coming back to you. Jonathan Evans, what are your thoughts on the new government's recent announcement that all buy to let landlord properties must have an EPC rating of C by 2030?

Jonathan Evans 00:09:57

So landlords of. Obviously a crucial part for the you know, they play a crucial role in the UK housing system, but the number of landlords there are. Skipton research is telling us that 1/5 of landlords don't know what their EPC rating actually is. It's also telling us that 46% are planning to use the savings to make upgrades and retrofit the properties to meet the new standards. And there's also a population. 39% of landlords are saying that they're going to just sell up because of the new proposals. But I do think it's the right thing to do. You know, if you're someone that lives in one of these properties, these changes are going to improve the living conditions for tenants, you know, there's a cost of living crisis out there. It can potentially improve the cost of living in these properties and heating these properties, and also it's going to help achieve the net zero target that the government set for 2050 so that's the sort of positive side of it. You know, that list is not exhaustive, but it's some of the things that I wanted to highlight. Hamptons, who are also a group company of part of scripting group. They're certainly estimating that it's going to take landlords about 18 years to achieve an EPC rating of ATC. And there's also another sort of interesting stat that they've released in a recent report, essentially saying that it's going to take the same number of properties that will need to be upgraded in the next five years that's actually been done in the last 30 years. So that kind of lets you see the scale of the challenge that landlords are facing. Our CEO of home finance, Charlotte Harrison, has been lobbying the government, and essentially, you know, lobbying them, asking them to introduce incentives, such as tax cuts for landlords, or grants, grant funding for landlords, or even, you know, pound for pound matched funding for landlords to upgrade their properties in the upcoming budget. So, you know, big change for landlords, but in the whole I think it's a positive for the tenants and for the overall UK agenda to get to net zero.

Simon Meadows 00:11:58

You know, I've got a rental property, and I, as you were saying that there, I was just trying to think, what is the EPC rating of my property, and I would need to check, actually, that's not great, is it? I need to check that before 2030 and get onto it.

Jonathan Evans 00:12:13

Simon, is if, if you're part of, if you are part of Skeptic group, we actually have an EPC plus offering, and we deliver that through another group company and vibrant who are the leading suppliers, suppliers of EPCs in the UK. They do roughly one in 10 EPCs in the UK. So if you, if you were a member of Skipton, ie, you had a savings account with us, or a mortgage you, we would offer you up to 10 free EPC reports for up to 10 properties that you've got, or any bike, unless, that you've got.

Simon Meadows 00:12:44

My gosh, you don't miss an opportunity to sell. Do you? Jonathan? It's very impressive. Very, very good, actually. No, that's very, very interesting. And coming back to you, Jonathan, Aaron, what would you say the core benefits of retrofit? Thanks.

Jonathan Annan 00:12:59

Simon. I think if you look at Retrofit that it seeks to kind of holistically improve a property from the point of view of energy efficiency, but the sort of Co benefits alongside of that are that if it's done correctly, what you will have is a healthier and warmer household. The internal air quality will be better, the ventilation will be better. The property is going to be Fauci but to run you can also build elements of climate resilience and retrofit as well. But believe it or not, some people now would have to look at, potentially, looking at whether or not property could be cooler in the summer and warmer in the winter, and with correct design, that's absolutely possible. So there are a number of Co benefits, along with the fabric approach, the retrofit, first and foremost, for individuals trying to change the houses in the United Kingdom, it's going to be cheaper to run because it is expensive. Because it is expensive to run a home now, but the benefits alongside of that are ones that I've just discussed there. And I would say essentially, anybody looking to maintain the property over the longer term can build in elements of retrofit to that plan. Because retrofit isn't something that has to be done overnight. It's an expensive process, and the budgetary constraints are something that I think everybody has to recognize, something called adjust transitions, a big talking point just now, because when you're expecting people to spend money to decarbonize a property, you have to give them a pathway. You can't just expect them to do overnight. So if a finance provider is providing a mortgage over 25 or 30 years, then it's it's feasible to plan retrofit over that time period, there was touch points along that time period of remortgage or refinancing, you can build an elements of retrofit with the correct plan for retrofit. Excellent.

Simon Meadows 00:14:31

Finally, how would you both judge the success of this project? Jonathan Annan, if we can come to you first on that.

Jonathan Annan 00:14:38

No worries, I think one of the great things that skipping have done with the Regent road project is the brought in organizations external to the business to try and look at the learning outcomes from it. One of these is leap back at university, then they provide a measured outcome. So effectively, when somebody assesses a property, they can make assumptions on U values and without getting too technical elements. Such as that. But what skipping a plan on doing is measuring each and single each and every element of the retrofit. So the will see whether or not the air tightness of a property which is critical to making it more energy efficient has been improved. The will look at thermography, which is essentially looking at the building from a point of view of heat loss. So for me, my point of view, success is the learning outcomes. The property will be retrofitted, the energy performance certificate will be improved, and that's amazing, but the learning outcomes are the essential and critical part of this, and that's something that skipped them are really, really pushing.

Simon Meadows 00:15:31

And how would you judge the success of this project Jonathan Evans?