Scottish research identifies soaring construction costs


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Overall, the research found that the cost of new construction has increased from an average of £ 114,000 per unit in 2016/17 to £ 134-138,000 in 2020/21. SFHA says the report provides evidence of the rising costs that housing association and cooperative development has suffered over the past five years, including those driven by the introduction of additional requirements on energy efficiency, fire safety, and space standards. The report was prepared prior to the first meeting of the Review Group led by the Scottish Government and Kozla, Local Government Voice in Scotland. The review group considers whether adjustments are required to the current set of standard assumptions that support the grant-funded component of the Affordable Housing Provision Program. In addition, the report looks at the impact of higher costs not particularly linked to development – for example, investment in existing stock and new regulatory requirements. It could have an impact on the levels of investment housing associations and cooperatives capable of new construction. The implications of other issues, including Brexit and procurement reform, were also considered. The main findings of the research, which included interviews with 10 different housing associations and cooperatives including small, large, rural / remote and urban, include: The cost of building new homes is on the rise, with bidding prices rising by as much as 40-45% over the past five years. The cost of materials has risen dramatically over the past year, and there are signs the combined effect of Covid-19 and Brexit is putting more pressure on labor and material costs. The introduction of ambitious local design standards, such as the Glasgow standard, increases costs by 5–10% and 13-15%, while building to the Passivhaus standard could add 17.3% to the cost of a typical two-bedroom property. SFHA said that many Registered Social Landlords (RSLs) are still in the process of understanding the implications of the cost of the Energy Efficiency Standard for Social Housing 2 (EESSH2), but those who have already assessed it indicate that it could add anywhere between £ 7-10,000 each. Unit for venture capital investment programs, excluding alternative heating. The volume of investment required drives some RSLs to consider the balance of capital investment programs, with priority given to ensuring that the existing stock meets the required standards. New fire safety requirements for existing homes will increase installation / replacement costs, and these new requirements also have an impact on staffing costs, with a number of RSLs employing additional personnel. There is a concern among landlords in rural areas that the cost of meeting EESSH2 and fire safety requirements could be higher in rural locations / islands. It was felt that the reform of the procurement system had increased costs and complexity, with little or no positive impact. There was also a perception that reforming the procurement system was discouraging small contractors, making the sector increasingly dependent on a relatively small group of large contractors. “This report shows how much additional costs the developing members have suffered in the past five years. A large proportion of these costs have been driven by increased standards, including energy efficiency and fire safety,” said Sally Thomas, chief executive of SFHA. The Scots have introduced higher standards in their pursuit of Scotland’s goals of net zero and of course to ensure the safety of tenants, which remains of the utmost importance to SFHA members. “Nevertheless, it is also evident that the grant criteria system must be revised in order to reflect the additional costs stipulated in our report, to ensure that RSLs can continue to provide the safe, warm and affordable homes that the Scottish Government describes in its housing strategy through 2040.” The grant is an investment In affordable housing, not a subsidy. We are not highlighting the increase in costs just to ask for more money; What we do is demonstrate sufficient investment to allow our members to offer the affordable housing required to address the backlog of needs piling up in Scotland. “The benefits of doing so are well illustrated, including our 2020 Report, The Social Impact of Housing: Economic, Social, Health and Well-Being. This report finds that the social and economic returns to investment in the social housing sector are significant for Scotland and its people, including reducing poverty and homelessness, and improving health. And job creation. ” Do you have a story? Email [email protected]


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