Friday, August 31, 2007

Selfbuild VAT reclaim statistics

I have been taking at look at the UK’s selfbuild VAT reclaim figures. These are a key statistic, used to measure the size and the health of the selfbuild market where, uniquely, new homebuilding is zero-rated for VAT purposes. What I have managed to glean from the Revenue & Customs are new figures from March 2004 to August 2006; I already have figures for six years in the 1990s, so there is enough data here to make some comparisons.

In the first period, 1993-99, the average number of reclaims under the DIY reclaim scheme was 10,593 per annum. In the second period, April 04 – Aug 06, this was 10,810, a 4% increase, possibly not statistically significant.

However, the average size of each reclaim has grown dramatically, from £4,166 in the 1990s, up to £6,547 in the Noughties sample. A whopping 57% increase.

What the figures reveal

Firstly, they don’t really tell you the size of the selfbuild market. The only people who make DIY reclaims are non-professionals, who aren’t registered for VAT and who buy materials on their own account. Therefore there will be lots of selfbuilds that never appear in these figures. We have to guess just how many more, but you won’t be far out if you were to add 50% to the numbers — i.e. around 15,000 per annum.

They do tell you that the number of selfbuilds isn’t really growing. In fact earlier figures that I’ve seen also confirm this. The number of DIY reclaims has hovered between 10,000 a year and 12,000 a year ever since 1984 when VAT first became chargeable on building work.

What about the dramatic increase in the amount being spent? I can see two obvious reasons for this. Firstly, inflation in building materials, which has been growing steadily over the past few years. Secondly, selfbuilders specifying more upmarket materials, in line with housebuilding generally. Granite worktops, underfloor heating, hardwood floors, etc.

Finally, one fact is revealed in the latest figures which I haven’t seen before. Around 15% of claims are disallowed. That seems an extraordinarily high figure. I know the scheme is somewhat complex to understand, but nevertheless that’s quite a figure. I don’t know whether this 15% represents a lot of wholly rejected claims or whether it’s people wrongly claiming for unallowable parts of their build costs — probably a bit of both. The figures I have used for the amounts claimed excludes the rejected claims.

If you want to know more about the DIY VAT reclaim scheme, the relevant page is here. Please note, this scheme only operates in the UK.

Tuesday, August 14, 2007

The timber frame fires

Building carries a disturbing report of yet another fire in a half-built multi-storey timber frame apartment block. This one took place in Hatfield on Saturday (11/8/07) and Phil Clark has uncovered a short video showing the event. It follows hard on the heels of similar fires in Newcastle (April 07), Willenhall (Mar 07) and Colindale in North London (July 06). YouTube carries video clips of Colindale, Newcastle and now Hatfield.

I don’t know how many timber frame apartment blocks are under construction at any one time in this country, but it’s still a building technique that is in its infancy so I would be surprised if there are more than a few hundred on the go. The superstructure is often only left exposed for a few days — this is one of the rationales behind using timber frame — yet we’ve just had four burn to the ground in a similar manner. And amazingly, no one has yet been hurt, let alone killed.

Yes, it’s deeply worrying. But it’s also beginning to look a little suspicious.


Monday, August 06, 2007

Multifoils and Private Building Control

It’s now nearly a year since the two most important building control bodies in the UK moved to stop the use of multifoils, at least as a substitute for conventional insulation materials. Under pressure from government, the LABC (Local Authority Building Control) and the NHBC (National Housebuilders Council) simultaneously stated that in future they would only accept insulation that met the standards laid out in BR443, which translates as using the U value figures derived from the guarded hot box test.

Multifoil insulation performs very poorly in guarded hot box testing. The manufacturers claim that it’s the guarded hot box test which is at fault. Their case rests on them performing well in comparison tests against conventional insulation, usually 200mm or 250mm of mineral wool. Such tests have been carried out several times by the multifoil manufacturers, to the satisfaction of some independent accreditation providers, but they have yet to win a European Technical Approval for their testing methods and they remain highly controversial.

I don’t want to dig too deeply down into the multifoil debate here — it has been covered several times on this blog already — but what is worth mentioning at this point in time is that there are still a number of private building control bodies out there who are more than happy to accept multifoil roof insulation. I was talking to a director of MLM last week and he remains an enthusiastic supporter of multifoils and is more than happy to sign off building works that use multifoil insulation. And I came away with the impression that MLM are far from unique in this respect, and that private building control saw this as a positive way of differentiating their services from the strictures of both local authority building control and the NHBC.


Thursday, August 02, 2007

Energy Performance Certificates (EPCs) proved useless

I have argued that Energy Performance Certificates will not be quite the powerful tool for the good that Yvette Cooper et al are hoping for. Now Jeff Howell, who writes for the Daily Telegraph, has gone one better and shown just how useless they are by having two surveys carried out on his refurbished house in Suffolk, and analysing the results. The Sunday telegraph reported:

When the introduction of compulsory energy assessments for homes was announced, ministers insisted that they would be an essential tool in the fight against global warming.

Energy Performance Certificates (EPCs), however, are so limited in their scope that they are incapable of delivering accurate results, a Sunday Telegraph investigation has found.

EPCs are a key element of the controversial Home Information Pack scheme.

Hips become compulsory on Wednesday (July 25) for anyone selling or renting out a property with four or more bedrooms.

This newspaper booked two officially accredited assessors to evaluate the same Suffolk property last week. Each charged £100 plus VAT for a 35-minute inspection.

Not only were their estimates of energy use in the house markedly different, potentially affecting sale or rental value, but both inspectors overlooked crucial and clearly-defined energy-saving additions which have been made.

The three-bedroom cottage dates from 1850. Its owner, Jeff Howell, a columnist for this newspaper and a chartered surveyor, has carried out a £30,000 refurbishment over the last five years to bring it into line with 21st-century energy standards, including underfloor heating, hemp plastering, as well as roof and loft insulation.

Neither of the inspections registered that there was wall and floor insulation, and both failed to note insulation between the rafters.

As a result, the property's energy-efficiency rating and environmental-impact rating was graded either F or G - the two lowest on the scale.

To Mr Howell's dismay, both reports also accused him of using 75 per cent more energy than he estimates to be the case. "These guys seem to be little more than box-tickers," said Mr Howell, having studied their reports. "And unfortunately they haven't even managed to tick the right boxes."

EPCs are intended to give prospective purchasers and tenants an idea of a property's energy consumption, together with a list of measures that can be taken to cut fuel bills and carbon emissions.

This part of the Hips scheme has been introduced under the European energy performance of buildings directive.

Despite their troubled history, Yvette Cooper, the housing minister, has remained a staunch supporter of the packs. In May, it was announced that their introduction would be delayed by two months and phased in gradually after there were found to be too few energy advisers. Last week, the Government admitted £19.5 million has been spent on the scheme so far, although MPs have yet to vote on it.

When told about the true status of Mr Howell's property, Steve Younger, one of the assessors, said: "The EPC has merits in some areas, but only when used in conjunction with Home Information Packs. As a stand alone item, I cannot see why they would encourage anyone to buy a house or not buy a house.

"If you were going to rent a property, I think you'd look at two certificates and ask which was the best house. But our assessment is supposed to be a purely visual one. We are not obliged to be thorough."

The other inspector, John Anscomb, from Ipswich, said: "If the owner of the property had been able to show me what sort of modifications had been made to the property, I could have included that information in my report. I guess any system could be more robust." Grant Shapps, the shadow housing minister, said: "This is the latest example of the nonsense that lies behind Hips."

The Department for Communities and Local Government said: "EPCs are a comprehensive assessment of the energy efficiency of a home, with standards set by industry experts and endorsed by environmental groups.

"The quality of assessments will be fully monitored by each accredited scheme to ensure standards are met. Customers unhappy with an assessment will be able to challenge the result."

For the Sunday Telegraph original visit: