Select Committee on Environmental Audit Written Evidence


Memorandum from the Council of Mortgage Lenders


  1.  The Council of Mortgage Lenders (CML) welcomes this opportunity to offer evidence to the Environmental Audit Select Committee enquiry on sustainable housing.

  2.  The CML is the representative trade body for the residential mortgage lending industry. Its 143 members currently hold over 98% of the assets of the UK mortgage market. In addition to lending to the owner occupied and private rented markets, the CML members also lend for new-build, repair and improvement to social housing.

  3.  Comments below are structured around the questions posed by the Select Committee.

Are the conclusions of the Barker Review compatible with the general principles of sustainable development and the Government's own sustainable development objectives?

  4.  The Barker review proposes a large number of additional houses (an additional 70,000+ above current levels of building). To build this number of additional properties would have impacts on the environment, and extra effort will need to be expended to ensure that this building is carried out sustainably. In paragraph 1.46, Kate Barker comments "Extra house building will have environmental consequences and this cannot be ignored, however, the impact can be reduced by ensuring that land which society values least is used and tackling issues of water usage and waste management". The CML believes this underplays the potential impact of building thousands of additional houses. Local authorities will be under considerable government pressure to approve development plans. It is vital that the government recognises this and ensures that high environmental standards are maintained, and that any development is sustainable in both economic and environmental terms.

In view of the Barker Review is there are need for an overarching national strategy to ensure that the environment is at the heart of any building programme?

  5.  Yes. The CML believes there is a need for an overarching national strategy. The Barker Review estimated that, at current rates of replacement, properties built today will need to last for 1200 years. This means that properties need to be built sustainably and able to adapt to significant climate changes during their lifetime. Results from the United Kingdom Climate Change Impacts Programme scenarios show that:

    —  The UK climate will become warmer.

    —  Winters will become wetter and summers may become drier throughout the UK.

    —  Heavy winter precipitation will be become more frequent.

    —  Relative sea level will continue to rise around most of the UK's shoreline.

    —  Extreme sea levels will be experienced more frequently.

  6.  Buildings, therefore, need to be built to cope with these conditions. They also need to be built in a way that does not exacerbate other climate changes; for example, that new building does not increase run-off and, therefore, flooding. A national strategy could begin to ensure that these factors are taken into account. Planning Policy Statement 1 (PPS1) which is currently out for consultation by the ODPM could provide this opportunity (see below).

Is the current planning system robust enough to ensure that the environmental implications of building projects are fully taken into account? How can the planning system be used to increase the building of more sustainable housing? Would the proposed changes to the planning system in the Barker Review have a positive or negative effect on the environment?

  7.  The CML is not convinced that the current planning system is robust enough to take account of all the potential environmental implications of building projects. The Planning Policy Guidance note 3 (PPG3) on Housing does not address issues of the environment or sustainability. Considerable effort has been put into developing Planning Policy Guidance note 25 Development and Flood Risk (PPG25) to try to ensure that inappropriate development does not take place in the floodplain and that it does not increase run-off. But it is still difficult to estimate what impact PPG25 has had. Local authorities are required to report developments that have gone ahead against the Environment Agency advice under the Department for the Environment, Food and Rural Affairs (DEFRA) High Level Target 12. As a result of the strengthening of PPG25, there have been significant reductions in new developments going ahead in flood risk locations. However, last year (2003/04), at least 21% of planning applications went ahead against EA advice (DEFRA (2004)). The actual number of developments going ahead in flood risk locations could be up to twice as high, because the EA is only consulted in about half of all the planning applications.

  8.  PPS1 provides an opportunity to put sustainable development at the heart of planning. While it covers some of the broad principles to which planners should adhere, there is currently little accountability or monitoring of planning decisions. Without this accountability, local level decisions could be taken that work against national goals of sustainability. It is proposed that a number of changes for delivering housing should be taken forward through Regional Housing Boards (RHBs). It is, therefore, important that strong national guidelines are in place, and that RHBs do not simply interpret their task as getting homes built regardless of quality or consequences.

Where will the proposed new housing be built? What are the implications for land-use and flood risk of the large-scale proposed building projects?

  9.  As noted above, the Barker Review proposes that a number of decisions about where new housing should be built should be taken through RHBs. RHBs would need to take into account environmental factors and the potential impact of climate change when deciding where new properties should be built.

  10.  In terms of flood risk, for a number of years, insurers have been working with the Government on development and flood risk issues. Insurance against flood risk is currently available as part of standard buildings, and contents insurance in the vast majority of the UK. Insurers are keen to offer cover to as many properties as possible. However, if properties are built in inappropriate places, against Environment Agency advice, then insurance cover cannot be guaranteed. As insurance is a standard condition of obtaining a mortgage, if insurance is unavailable mortgages will also be unavailable. Building under these circumstances would be unsustainable. The insurance and mortgage implications of large-scale building projects, therefore, needs to be considered at the planning stage.

Is it possible to ensure materials and resources used, and waste produced, during building do not have a harmful impact on the environment?

  11.  This is not an issue for lenders.

Are the building regulations as they stand capable of ensuring that new housing is truly sustainable in the long term? How could they be improved? Could greater use be made of existing environmental standards for housing?

  12.  While the building regulations offer an assurance as to lifespan and durability, they do not cover all aspects of the design and construction of properties built by Modern Methods of Construction (MMC), rather than by traditional (brick and block construction). Lenders have taken a heightened interest in MMC due to the Government's drive to utilise it as one means to boost housing supply, as set out in the Sustainable Communities plan. While lenders have no specific interest in any particular mode of construction they have a general requirement that a property must be of a standard to be fit to stand as security for a mortgage of up to 30 years. The past track record of MMC has not been good in this respect, and the Government was forced to develop an accredited repair scheme (The PRC Homes Scheme) to deal with outstanding defects. Sadly, the scheme was wound up leaving many properties unremediated.

  13.  A number of concerns have been raised by lenders regarding the new generation of MMC. These frequently fall outside the building regulation-based approach to certification adopted by bodies such as BRE and BBA. These concerns embrace:

    —  Lifespan—can this property with regard to its specific design/construction features be expected to meet the requirement for a 60-year minimum lifespan?

    —  Whole life costs; how does the property compare with a traditional design?

    —  Reparability—can the property be repaired by non-specialists and owners themselves?

    —  Adaptability—can the property be altered over its expected life to meet changing needs; eg, can a conservatory be added?

    —  Insurability—can buildings insurance be obtained on normal terms?

    —  Flood resilience—can unconventional materials, sometimes used in unusual ways, stand up to sustained contact with/immersion in water?

  14.  The CML is currently consulting with BRE over a proposed new certification standard for MMC properties that will cover the above concerns, and will move beyond a purely building regulations based approach. The CML is also urging Government to take a lead in promoting high standards for the new generation of MMC, and to ensure that there is again an accredited repair scheme to deal with problems that already exist with previous generations of MMC.

  15.  Barker is clearly aware of the risks, and has indicated that mistakes of the past should be avoided when seeking to increase supply. It would be very unfortunate if new levels of output were achieved only by using techniques which, over time, failed to deliver homes that had a reasonable life and remained in demand. The Committee needs to reinforce this message.

  16.  In addition, building regulations could also be strengthened to incorporate resilience to climate change including flooding. Building in resilience at an early stage can prevent future damage, and is cheaper than trying to retrofit exiting buildings.

How will it be possible to ensure a sustainable infrastructure, including transport and water supply, which will be necessary to support any extensive house building, is put in place?

  17.  Whilst this is not particularly an issue for lenders, it seems to us that decisions about infrastructure need to be taken at an early stage, including building in contingency that can cope with further development in the future.

Do those involved in housing supply, both in the public and private sector, have the necessary skills and training to ensure new housing meets environmental objectives? If not, how can the knowledge base of those involved in the planning and building process be improved?

  18.  The short answer is probably no. The Barker report points up the skills shortages in the house building industry and the increasing reliance on imported labour. This might suggest a greater risk of "shortcuts" and a reluctance to apply/lack of awareness of environmental objectives. Without doubt, the knowledge base can and must be improved given both the likely life of new homes and the extent of environmental change taking place. This is no longer a luxury; it is a necessity, especially if these homes are to be mortgageable over the longer term. Planning courses need to incorporate new awareness of these issues, and building courses must include the skill and technique basis for dealing with the problems that will arise.

May 2004

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