Housebuilding sector in need of more investment, resources and help from government to build sustainable homes, new research by Gowling WLG finds

  • National survey of housebuilders reveals 96% are seeking more guidance to help meet the target date of 2050 for all new buildings to operate at net zero carbon emissions.
  • On average, housebuilders say they will have to divert 20% of their profits into making new build homes '2050-ready', rising to 30% among larger housebuilders.
  • A survey of UK consumers, carried out simultaneously, shows a willingness to pay more for greener homes, but not enough for housebuilders to recoup all of their costs.

More than three quarters (77%) of UK housebuilders believe meeting the net zero carbon emissions target is achievable, but this is dependent on a number of factors - not least investment - according to new research by international law firm Gowling WLG.

The report, 'Building and Buying Better Homes', shows a clear commitment to sustainable homes from both housebuilders and consumers. Almost half of the housebuilders surveyed (40%) have a sustainability strategy in place - increasing to 70% among those building more than 2,000 homes a year - and 45% regularly discuss the issue at board level. Equally, consumers are showing a strong interest in buying 'green', with sustainability ranking third in buyers' list of priorities once cost, location and size are taken into account.

More than a third (36%) of housebuilders said they have a clear vision of the changes they need to make to deliver sustainable homes in line with the Government's target of achieving net zero carbon emissions by 2050. However, 96% said more guidance is needed on a range of areas, showing access to information is a priority to help assess their position and move forward.

As well as more guidance, access to the investment required to drive housebuilders' sustainability plans forward is a key issue. Our research highlights four main areas of focus for housebuilders to consider: finance, planning, materials and resources, and diversifying their products.

A survey carried out simultaneously with UK consumers found that homebuyers are prepared to pay an extra £2,825.82 for 'green features'. However, as 50% of housebuilders expect that 11-30% of their profits will need to be diverted into delivering homes that meet the net zero carbon emissions target, there is shortfall to cover. Paying less for land is one option identified (37%), but only 13% of housebuilders are using 'green loans' or finance to make investments like this.

Dan Leather, real estate partner at Gowling WLG said: "For housebuilders, consumers and lenders alike, finance packages imposing sustainability criteria (sometimes referred to as 'green loans') are a win-win - providing developers and consumers with competitive rates of finance and further enhancing the sustainability credentials of the lender. We expect this type of finance to become much more prevalent in the next three to five years, making it easier for sustainability-minded developers to raise finance in a competitive marketplace and build the homes of the future. It will also aid consumers in securing mortgages with incentives linked to the sustainability criteria of the relevant dwelling."

As many as 61% of housebuilders consider sustainability at the planning stage of the development lifecycle, which reflects the strong commitment to building sustainably. However, at the same time, 39% point to the need for a more supportive infrastructure in a market where competition for development sites is tough. So, as part of any sustainability strategy, engaging with landowners and planning authorities about the aspirations of builders and buyers for sustainable homes is crucial.

Almost half of those surveyed (46%) identify materials and construction methods as another area where savings might be made. The cost of materials is clearly a barrier (identified by 46%), in particular for those operating regionally. This could be symptomatic of the catch-up needed between the demand for and supply of sustainable materials and green technologies.

Ben Stansfield, planning partner at Gowling WLG added: "As supply chains adjust, the availability of sustainable materials will increase and prices should reduce. In the meantime, there are opportunities to embed sustainable practices across the supply chain and throughout the development - not just in individual homes - to achieve long-term benefits. Developers can improve their sustainability credentials by undertaking a cost/benefit analysis of green technologies, sharing information with their customers as to the benefits of sustainable options and finding novel ways to help their customers fund them."

Costs aside, housebuilders understand the benefits of building on their sustainability strategy and creating a compelling offering. As many as 96% plan to better meet the sustainability requirements of their customers, with key focus areas including: incorporating sustainability more into design and construction (53%); diversifying products (39%) and building a specific 'eco development' (39%).

Looking at what features these new homes might include, consumers highlighted efficient energy usage as a primary benefit of a sustainable home. In addition, when discussing post-pandemic homes, garden space, natural light within the building and access to open spaces/places to walk were the top three priorities. The findings reflect the changed nature of how people now live and work.

Dan Leather adds: "This is a transformational period for the industry as it moves towards achieving the net zero carbon emissions target. The impressive element though is that this is driven only in part by regulatory requirements and legislation. Housebuilders have spotted the direction of travel early and are already taking positive and proactive steps to deliver increasingly 'green' and sustainable developments.

"Backed up by supportive guidance and regulation, successful schemes will see housebuilders, consumers, landowners, planning authorities and government bodies all working together. And with support from the supply chain and green funding options for both developers and consumers, the drive for sustainable homes and developments can sit alongside the continual pressures faced by the industry to deliver more homes and meet the needs of a housing shortfall."

Download our report 'Building and Buying Better Homes' to find out more.

About the report

The research was carried out by Yolo Communications between 26 October 2020 and 10 December 2020. The sample comprised 302 UK housebuilders, from specialist regional residential developers to nationwide housebuilders. A small number of in-depth interviews were also conducted with national housebuilders. At the same time, 2,176 consumers from across the UK were involved in the research, including 1,716 private homeowners and 460 first-time buyers.

All research conducted adheres to the UK Market Research Society (MRS) code of conduct (2019).