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Do mandated green initiatives in this vein have a history of eating into the profits of construction companies in the UK? At a naive, laymen’s first glance I’d

Do mandated green initiatives in this vein have a history of eating into the profits of construction companies in the UK? At a naive, laymen’s first glance I’d imagine it creates opportunity for more!

pasabagi 6y ago
The ideal situation for a construction company is where the house they sell has the best cost to manufacture / sale price ratio. People buy houses without living in them first, so the best strategy is to build a house that is very cheap, but is visually impressive. Consequently, developers tend to build houses that are barely functional as such, with all sorts of damp/heating/basic liveability problems, but which look impressive. Green initiatives are a sort of nightmare for developers, because the energy efficiency of a house is a cold, uninteresting metric that is not immediately present to the potential buyer. Consider windows, for example. In an unregulated market, the cheapest, most crappy windows are absolutely the optimal choice for a developer. The fact that they are going to be drafty, break within the first few months, and quickly become covered in mold is simply impossible for a buyer to know, before they've lived in the house for a year or so. Green windows, however, have to meet energy efficiency ratings - which means they must actually work. They have to keep cold out and heat in, or vice-versa. They can't be giant condensators. They probably don't look quite so pretty, and much worse, they are far more expensive. So the developer actually loses perceived property value, while paying more!
- drunkpotato 6y ago
  This happened to a family member, looked great, expensive looking house and high price, but shoddy work, all sorts of basic problems with the house in the first year. I wonder if this couldn't be mitigated somewhat by a clause that makes the developer liable for all problems in the first year. (I know one potential loophole would be that the developer could use a proxy to "buy" from themselves and hold for a year, but it seems like that could be appropriately handled through existing or minimally altered fraud laws.) It's hard to see how we could get from our present situation to something like that, but it might improve craftsmanship, but would also make new houses even more expensive.
  - 7952 6y ago
    New builds will already come with a guarantee. In the short term the developer will send someone to fix issues and may well still have people working on site. In the long term there will be insurance policy. But it just happens that there is sometimes an economic incentive to accept lower quality in order to meet some other objective. Maybe the electrical contractor put in a low bid and wants to finish the job. Or maybe the developer is running low on cash within the project budget. Or perhaps the project manager is under pressure to hit a target. Developers are just like any other complex corporation. Quality is just one thing that has to be balanced. And it is a market with massive pent up demand and buyers everywhere. And customers who have very little choice after they have signed on the dotted line.
    - TomSwirly 6y ago
      A lot of it also has to do with a broken court system. I now live in the Netherlands, and in the 80s, developers also started to pull this shit. Soon the lawsuits came, and very quickly they learned not to do this. Most Dutch people have both comprehensive house insurance _and_ legal insurance!
  - 0d9eooo 6y ago
    I've lived through this and seen this in histories of home purchases. It's the reason I don't recommend buying a brand new home unless you oversaw its construction. The ideal situation in my experience is to find a home maybe 10 years old. Problems don't necessarily become evident the first year. Then again homes of any age have issues creep in, so maybe there's always risks.

pasabagi 6y ago

The ideal situation for a construction company is where the house they sell has the best cost to manufacture / sale price ratio. People buy houses without living in them first, so the best strategy is to build a house that is very cheap, but is visually impressive. Consequently, developers tend to build houses that are barely functional as such, with all sorts of damp/heating/basic liveability problems, but which look impressive. Green initiatives are a sort of nightmare for developers, because the energy efficiency of a house is a cold, uninteresting metric that is not immediately present to the potential buyer. Consider windows, for example. In an unregulated market, the cheapest, most crappy windows are absolutely the optimal choice for a developer. The fact that they are going to be drafty, break within the first few months, and quickly become covered in mold is simply impossible for a buyer to know, before they've lived in the house for a year or so. Green windows, however, have to meet energy efficiency ratings - which means they must actually work. They have to keep cold out and heat in, or vice-versa. They can't be giant condensators. They probably don't look quite so pretty, and much worse, they are far more expensive. So the developer actually loses perceived property value, while paying more!

drunkpotato 6y ago
This happened to a family member, looked great, expensive looking house and high price, but shoddy work, all sorts of basic problems with the house in the first year. I wonder if this couldn't be mitigated somewhat by a clause that makes the developer liable for all problems in the first year. (I know one potential loophole would be that the developer could use a proxy to "buy" from themselves and hold for a year, but it seems like that could be appropriately handled through existing or minimally altered fraud laws.) It's hard to see how we could get from our present situation to something like that, but it might improve craftsmanship, but would also make new houses even more expensive.
- 7952 6y ago
  New builds will already come with a guarantee. In the short term the developer will send someone to fix issues and may well still have people working on site. In the long term there will be insurance policy. But it just happens that there is sometimes an economic incentive to accept lower quality in order to meet some other objective. Maybe the electrical contractor put in a low bid and wants to finish the job. Or maybe the developer is running low on cash within the project budget. Or perhaps the project manager is under pressure to hit a target. Developers are just like any other complex corporation. Quality is just one thing that has to be balanced. And it is a market with massive pent up demand and buyers everywhere. And customers who have very little choice after they have signed on the dotted line.
  - TomSwirly 6y ago
    A lot of it also has to do with a broken court system. I now live in the Netherlands, and in the 80s, developers also started to pull this shit. Soon the lawsuits came, and very quickly they learned not to do this. Most Dutch people have both comprehensive house insurance _and_ legal insurance!
- 0d9eooo 6y ago
  I've lived through this and seen this in histories of home purchases. It's the reason I don't recommend buying a brand new home unless you oversaw its construction. The ideal situation in my experience is to find a home maybe 10 years old. Problems don't necessarily become evident the first year. Then again homes of any age have issues creep in, so maybe there's always risks.