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Who, for example, will be paying for reworking the stock of old housing in a lot of European countries? Stranded assets are not just an issue for big investors

Who, for example, will be paying for reworking the stock of old housing in a lot of European countries? Stranded assets are not just an issue for big investors and corporations.

ZeroGravitas 3y ago
You can pay for a house refit with future fuel savings and governments can add incentives paid for with lower health costs. The timeline might be long enough that people, especially landlords who don't have to live in the drafty, cold building or pay the fuel costs, won't do it without various carrots and sticks but that's totally different from a stranded asset.
- RandomLensman 3y ago
  Some of the now paused ideas of needing to modernize buildings would have actually ruled out use of of buildings below certain standards from certain dates - so stranded assets are quite possible. Payback: Maybe over 30-50 years, but not over 20 or so - so for a lot of older people this isn't an economically viable proposition. Lower health costs? Where does that come from?
  - ZeroGravitas 3y ago
    That's a "stick", not a stranded asset. The NPV of compliance would need to negative for the asset to be stranded. If the older people want to sell their home to someone else then they need to do the work. Again, unless that work costs more than their house, which to be clear, it doesn't, then it's not a stranded asset.
    - RandomLensman 3y ago
      If you need a few hundred k to convert in order to still live in your place (not sell it), I'd say that is getting pretty close to stranded asset, because you need to find a lot of money to stay in there. If you don't have the money, it is a stranded asset and I am sure some aggressive investor will happily make you a bad offer.
      - ben_w 3y ago
        I'm considering building right now; "a few hundred k" is demolish and redo from the ground up territory for normal housing around here. The only way you're doing that for a mere renovation is if it's a historically significant building.
        RandomLensman 3y ago
        Something like 10k per square meter isn't a bad guesstimate for getting to a high energy standard. Then take a large house and you are there. Building and demolishing is way more expensive.
        ben_w 3y ago
        (1) Which currency are you talking in here? (2) This 98m^2 detached house is listed at €104k to build: https://www.massa-haus.de/fertighaus/einfamilienhaus/lifestyle-09-01-s/ https://www.massa-haus.de/fertighaus/einfamilienhaus/lifesty... This is the cheapest they do, yet a thing costing 10k/m^2 as you suggest would cost nearly a million.
        RandomLensman 3y ago
        Sorry, €1k per square meter. You are looking at the cheapest thing to build. Not at all what a townhouse in a city would cost, for example. You cannot just remove all neighbouring walls etc., so really need to do quite extensive work when re-doing things. So, 300 sqm at 1k is a lot of money. When people bought the houses they were often cheap compared to today, so income hasn't grown with property value.
        ben_w 3y ago
        > So, 300 sqm at 1k is a lot of money. 300 sqm also an unusually large house, from what I'm seeing.
        3y ago
  - blitzar 3y ago
    Roof insulation had a payback (for me) of 3 months last winter - it might have been 2 years at the old gas / electricty prices.
    - RandomLensman 3y ago
      Then you had a great starting point. Replacing a gas heater with a heat pump at sub 1000 euro annual heating costs will not pay back fast, for example.
      - blitzar 3y ago
        Most of the UK has the same if not worse starting point. Somehow the culture war decided that loft insulation is proof of the "woke mind virus".
        makomk 3y ago
        Most of the UK absolutely does not. In order to get payback numbers like that, you basically have to have no loft insulation at all, and previous government insulation schemes were so sucessful that there were already very few homes left with no loft insulation by 2008: https://www.theguardian.com/money/2008/sep/27/energy.loft.insulation https://www.theguardian.com/money/2008/sep/27/energy.loft.in... For a while after that, the government funded insulation top-ups in order to get an impressive sounding number of installs they could brag about, but those had much worse return on investment and that program was killed off a few years later. The thing is that we have an election coming up and a lot of the British press want the party that was in power back then and still is to lose, so they've pushed the narrative that cancelled insulation program would've achieved a lot more than it could've in reality and that people would've been saved from high energy bills if the government hadn't cancelled it for being too woke. There's been similar nonsense about other things like onshore wind for the same reason. Anyway, at least in the UK the problem is that almost all of the easy, high-return on investment insulation upgrades have been done, and the only way to have a substantial impact is through ones that have payback times in the decades. If the era of zero interest rates is over permanently, that's basically equivalent to saying they'll never pay back the cost in many cases.

Who, for example, will be paying for reworking the stock of old housing in a lot of European countries? Stranded assets are not just an issue for big investors and corporations.

ZeroGravitas 3y ago

You can pay for a house refit with future fuel savings and governments can add incentives paid for with lower health costs. The timeline might be long enough that people, especially landlords who don't have to live in the drafty, cold building or pay the fuel costs, won't do it without various carrots and sticks but that's totally different from a stranded asset.

RandomLensman 3y ago
Some of the now paused ideas of needing to modernize buildings would have actually ruled out use of of buildings below certain standards from certain dates - so stranded assets are quite possible. Payback: Maybe over 30-50 years, but not over 20 or so - so for a lot of older people this isn't an economically viable proposition. Lower health costs? Where does that come from?
- ZeroGravitas 3y ago
  That's a "stick", not a stranded asset. The NPV of compliance would need to negative for the asset to be stranded. If the older people want to sell their home to someone else then they need to do the work. Again, unless that work costs more than their house, which to be clear, it doesn't, then it's not a stranded asset.
  - RandomLensman 3y ago
    If you need a few hundred k to convert in order to still live in your place (not sell it), I'd say that is getting pretty close to stranded asset, because you need to find a lot of money to stay in there. If you don't have the money, it is a stranded asset and I am sure some aggressive investor will happily make you a bad offer.
    - ben_w 3y ago
      I'm considering building right now; "a few hundred k" is demolish and redo from the ground up territory for normal housing around here. The only way you're doing that for a mere renovation is if it's a historically significant building.
      - RandomLensman 3y ago
        Something like 10k per square meter isn't a bad guesstimate for getting to a high energy standard. Then take a large house and you are there. Building and demolishing is way more expensive.
        ben_w 3y ago
        (1) Which currency are you talking in here? (2) This 98m^2 detached house is listed at €104k to build: https://www.massa-haus.de/fertighaus/einfamilienhaus/lifestyle-09-01-s/ https://www.massa-haus.de/fertighaus/einfamilienhaus/lifesty... This is the cheapest they do, yet a thing costing 10k/m^2 as you suggest would cost nearly a million.
        RandomLensman 3y ago
        Sorry, €1k per square meter. You are looking at the cheapest thing to build. Not at all what a townhouse in a city would cost, for example. You cannot just remove all neighbouring walls etc., so really need to do quite extensive work when re-doing things. So, 300 sqm at 1k is a lot of money. When people bought the houses they were often cheap compared to today, so income hasn't grown with property value.
        ben_w 3y ago
        > So, 300 sqm at 1k is a lot of money. 300 sqm also an unusually large house, from what I'm seeing.
        3y ago
- blitzar 3y ago
  Roof insulation had a payback (for me) of 3 months last winter - it might have been 2 years at the old gas / electricty prices.
  - RandomLensman 3y ago
    Then you had a great starting point. Replacing a gas heater with a heat pump at sub 1000 euro annual heating costs will not pay back fast, for example.
    - blitzar 3y ago
      Most of the UK has the same if not worse starting point. Somehow the culture war decided that loft insulation is proof of the "woke mind virus".
      - makomk 3y ago
        Most of the UK absolutely does not. In order to get payback numbers like that, you basically have to have no loft insulation at all, and previous government insulation schemes were so sucessful that there were already very few homes left with no loft insulation by 2008: https://www.theguardian.com/money/2008/sep/27/energy.loft.insulation https://www.theguardian.com/money/2008/sep/27/energy.loft.in... For a while after that, the government funded insulation top-ups in order to get an impressive sounding number of installs they could brag about, but those had much worse return on investment and that program was killed off a few years later. The thing is that we have an election coming up and a lot of the British press want the party that was in power back then and still is to lose, so they've pushed the narrative that cancelled insulation program would've achieved a lot more than it could've in reality and that people would've been saved from high energy bills if the government hadn't cancelled it for being too woke. There's been similar nonsense about other things like onshore wind for the same reason. Anyway, at least in the UK the problem is that almost all of the easy, high-return on investment insulation upgrades have been done, and the only way to have a substantial impact is through ones that have payback times in the decades. If the era of zero interest rates is over permanently, that's basically equivalent to saying they'll never pay back the cost in many cases.