Economical Factors affecting the Sustainable Renovation of Listed Buildings

My Final Year Dissertation explored the ways in which Listed Buildings can be Renovated Sustainably. Within the scope of this study, I researched the three pillars of Sustainability broken down roughly into Social, Environmental, and Economical considerations. These three aspects need to be taken into account when considering anything to do with sustainability whether that be judging if a build is sustainable, or implementing sustainable aspects into a design - these factors will effect and affect all decisions.

This article will look into the important factors regarding economic decision-making in relation to the renovation of such buildings.

The economic considerations when refurbishing a listed building can vary on the size, scale, and rate of deterioration of the building. If the building is very large and has been obsolete for several years and perhaps victim to vandalism, it can often cost more money to renovate it sensitively over demolishing the existing property and replacing it with a new-build (Warwick, 2018).

The cost of renovation can also end in owners being unable to afford such measures resulting in them leaving the building abandoned in extreme cases. With listed buildings, demolition is very rarely an option, however, refurbishing such properties is not deemed a very attractive prospect to potential buyers despite its social and environmental benefits. This leaves lots of the listed building stock obsolete and open to further deterioration in a time of increasing housing shortages in the UK. According to Dyson, et al. (2016, pp44-57) adapting and reusing buildings can be more expensive or harder to fund because banks perceive adaptive reuse projects as having a higher level of risk attached to them so are less likely to grant loans. They can also be problematic as they maintain a large amount of uncertainty which makes it difficult to estimate costs associated with essential construction work and determining the end profit of the restoration. These buildings will also have to comply with building codes, listing restrictions, and the “cost associated with matching materials to the existing building” (Dyson et al, 2016, pp44-57). This would suggest a link to a societal lack of public interest, a lack o funding, and leaves more buildings left to decay further leading to a more intensive redesign when a buyer is finally found. In the interim, the value of the building decreases whilst also encouraging anti-social behavior in the local surroundings (Hammond and Hodgson, 2021).

As mentioned above, according to Dyson (2016), it is increasingly difficult to find funding for adaptive reuse projects due to the high level of uncertainty involved in restoration projects. Over the years there have been many methods of measuring economic and environmental viability which helps to address the question of whether the building is worth investing in and renovating.

The United Nations Environment Programme and the Society of Environmental Toxicology and Chemistry have coined the term Lifestyles Cycle Sustainability Assessment (LCSA) (or Life Cycle Analysis (LCA)) to analyse all dimensions of sustainability from cradle to grave, particularly in the context of environmental, economic and social considerations (Sadhukhan et al, 2021, pp1-3).

According to Dunant et al.:

“A large part of the whole-life carbon footprint of buildings is not associated with their use, but is embodied in the materials used for construction”

(2018: pp102-111)

The aim of the LCSA is to allow designers to be able to make more informed decisions when implementing materials into a design and can be used to calculate the embodied energy and carbon footprint in all aspects of an item’s life (Historic England, 2019). LCSA can be used in the context of a singular product or can quantify energy expended in the construction of a whole building and although there are a number of LCSA components available, there is no comprehensive LCSA methodology that can be used to calculate the full impact of refurbishment projects on life cycle emissions (Historic England, 2019, pp4-25) due to the LCSA’s high dependence on the availability of data of which is not currently readily available within the interior design industry (Sadhukhan et al, 2021, pp1-3). However, the LCSA approach can be used to roughly estimate and analyse if the cost to retrofit and renovate a listed building is consistent with a reduction of carbon emissions which will help decide if it makes economic and environmental sense to implement retrofit and renovation changes in an individual project and calculates the impact of the two over an estimated life cycle of 60 years (Historic England, 2019, pp4-25).

Aimed at bringing the existing housing stock back into use (Shaikh, 2020), the UK government have provided a 15% VAT tax reduction on all materials and trade costs associated with residential refurbishment projects providing they have been empty for 2 years or over (HM Revenue and Customs, 2014, 8.0-8.5). This in comparison to the full 20% VAT rate charged for trades, installation, and the purchase of materials for new build properties will incentivise members of the public to renovate and build back better before demolishing and building from scratch. As previous research from Godwin (2011), Moxon (2012), Historic England (2019) and the City of Westminster (2013) has shown, renovating a building is the most sustainable way forward with any design project, therefore it is likely that the economic incentive given by the UK government to push renovation costs down could improve viability for such projects in the future. The main repairs that will be able to be reduced in VAT cost include exterior and interior decorating and painting, damp and rot treatment, roofing flashing and guttering repairs, masonry cleaning, and the repair of any broken windows, doors, or appliances (HomeLogic, 2021). It is worth noting that there are some goods and trades exempt from the 20% VAT relief including the installation of carpets and fitted furniture, the erection and dismantling of scaffolding, the hire of equipment, landscaping, professional services (architects, lawyers, and surveyors) and safety equipment for contractors (Druces, 2022). The reduced rates also apply to the installation and materials for a series of energy-saving measures for residential properties, they include, central heating and water controls, draught stripping, insulation, solar panels, wind turbines, heat pumps, and wood fueled boilers (No Use Empty, 2021).

It can also be argued that the conservation, renovation, and presence of a historic building can add financial value to the cost of the surrounding buildings. The demand for period properties has been persistent over a number of years – many but not all are listed, however, with the charm, character, and history associated with an old building they are in constant demand. A recent study by Savills Research (2021) found a substantial link between built heritage and house prices. The research found that the areas with the highest proportion of listed buildings tend to have the highest house and premium prices on average relative to the population (Aldrich and Petrie, 2021). See the table below (Savills Research, 2021).

Figure 1: Table showing prices in relation to listed building concentration

References

Aldrich, N. Petrie, D. (2021) Challenge v reward: key considerations for renovating a listed property. Available at: https://www.savills.co.uk/blog/article/319217/residential-property/challenge-v-reward--key-considerations-for-renovating-a-listed-property.aspx (Accessed: 12/12/21).

Dunant, C. et al. (2018) ‘Options to make steel reuse profitable: An analysis of cost and risk distribution across the UK construction value chain’, Journal of Cleaner Production, 2(1), pp. 102-111. doi:org/10.1016/j.jclepro.2018.02.141.

Dyson, K. et al. (2016) ‘Critical Success Factors of Adapting Heritage Buildings: An Exploratory Study’, Built Environment Project and Asset Management, 6(1), pp. 44–57. doi: 10.1108/BEPAM-01-2015-0002.

Hammond,G. Hodgson, C. (2021) Grade I to net zero: can historic houses be made energy efficient? Available at: https://www.ft.com/content/df07814c-d8ee-495f-ab32-fa663fe16806 (Accessed 01/01/2022)

Historic England (2019) There’s No Place Like Old Homes. Re-Use and Recycle to Reduce Carbon. Available at: https://historicengland.org.uk/content/heritage-counts/pub/2019/hc2019-re-use-recycle-to-reduce-carbon/ (Accessed: 12/12/21)

Home logic. (2021) Are Home Improvements Tax Deductible? Available at: https://www.homelogic.co.uk/are-home-improvements-tax-deductible (Accessed: 20/11/21)

No Use Empty (2021) Bringing empty properties back into use – now less taxing! Available at: https://www.no-use-empty.org.uk/advice-and-guidance/property-tax-and-vat/reduced-vat-schemes/ (Accessed: 12/01/22)

Sadhukhan, J. et al. (2021) 'The Mathematics of Life cycle Sustainability Assessment', Journal of Cleaner Production, Volume 309, pp1-3

Warwick, S. (2018) Renovate or knock down and rebuild: which is more cost-effective? Available at: https://www.realhomes.com/advice/renovate-or-build-a-brand-new-home (Accessed: 20/01/22).

Figures:

Figure 1: Savills Research (2021) Challenge v reward: key considerations for renovating a listed property. Available at: https://www.savills.co.uk/blog/article/319217/residential-property/challenge-v-reward--key-considerations-for-renovating-a-listed-property.aspx (Accessed: 12/12/21).