The Homes and Communities Agency (HCA) has written to 160 landlords warning them to do better on meeting the requirements of the value for money standard. The standard allows for environmental improvements to count towards value for money.
“Their [registered providers] boards must maintain a robust assessment of the performance of all their assets and resources (including for example financial, social and environmental returns).”
So, for landlords who wish to demonstrate good value for money, we have put together some examples of how to monetise and quantify environmental improvements. Where you see them as useful you could include this methodology in your robust assessment.
- Office improvements – Where landlords reduce office energy bills or save on fuel usage for business and maintenance mileage you could register this as improvements in your value for money statement. Reducing office and refurbishment waste can also reduce direct costs.
- Improving homes – There are other ways you can illustrate the benefits of your environmental improvements. A key example would be energy efficiency improvements to homes. The treasury attaches a monetary value for each tonne of carbon saved. Landlords could report these monetary values.
Here is an example:
- A refurbishment project on 200 flats, including External Wall Insulation, efficient windows and a new heating system will reduce the carbon emissions of each flat by 1.6 tonnes. A total annual saving of 315 tonnes for the whole block of 200 flats.
- The expected lifetime of the improvements is 30 years. This totals a carbon emissions reduction of 9,450 tonnes.
- The treasury monetary value of this is £853,000.
This has saved the UK economy not having to install carbon reductions measures elsewhere. Landlords should, where possible, set out these considerable benefits to the work they do.
- Social benefits from energy efficiency improvements – According to members of the Sustainable Homes Index For Tomorrow (SHIFT), a leading benchmarking group for landlords, environmental improvements also result in many social benefits. For instance, lifting people out of fuel poverty can save significant costs to the NHS and raise education levels. Things of real value.
Throughout the UK, making homes warmer, which landlords routinely do for tens of thousands of homes, could save the NHS as much as £1.36 billion annually.
There are also reports of quantified reductions in crime and ASB which should save police forces money.
An association could illustrate that the energy bill savings to residents also represent the monetised social benefits of energy efficiency improvements.
- Adapting to climate change – Our weather has already changed. It is continuing to change. Twenty percent more flooding is expected by 2034. Landlords that take steps to protect residents from these impacts could list this in their value for money statements.
Last year we were commissioned by the Greater London Authority to make a “Business case for adaptation to climate change”. In these documents we set out how to monetise the benefits of protecting homes against flooding, water stress and overheating. As an illustration where a landlord adapts 1,000 homes for flooding and overheating this has a value of £347,000 in reduced costs.
Associations spend millions making improvements to their homes. It may be of use to register the benefits these bring. Value for money statements allow this.
This could also have the added benefit of better illustrating the wider benefits of the work associations do. Other commentators had views on this.
Andrew Burke, Sustainable Environments at the National Housing Federation said,
“Since HAs are already delivering energy efficiency improvements and reducing carbon emissions, this approach would enable them to reflect their environmental and social achievements in their VFM statements”
Bill Taylor, MD, Taylor Armitt Consulting, added,
“Making environmental improvements also leads to increased well-being for residents and the whole population. These can lead to significant social outcomes which should be included in value assessments. Recognising and quantifying them is key to improved performance in for the future.
There are several measurement tools that enable benefits to be recognised and robustly audited.”
An interesting benefit of this exercise would be to highlight the amount of money landlords are saving various sectors and other ‘social value added’ to help make a case for investment in better performing homes and lower fuel bills.
The key to monetising environmental benefits is first to quantify them. Having worked with hundreds of landlords, Sustainable Homes is in a key position to help and would be interested to hear from landlords who wish to measure and improve the sustainability of their stock.