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1. Introduction

This technical note outlines the specifications of the analysis carried out by the Building Research Establishment (BRE) for assessing the cost of a revised Decent Homes Standard for consultation and gives an overview of the methodology used.

Throughout this note, the revised Decent Homes Standard for consultation is referred to as 鈥楧HS2鈥�.

2. Methodology

Due to COVID-19 restrictions, the 2020/21 and 2021/22 English Housing Survey (EHS) was unable to collect the range of data required to fully model the new DHS2. Only 鈥榚xternal plus鈥� physical survey data was collected, meaning no surveyor assessment of the prevalence of disrepair and Category 1 hazards was done.

This project used the most recent full dataset available at the time of analysis, the EHS 2018/19 and 2019/20 paired combined dataset, giving a baseline date of 2019. The findings reported for the prevalence of each DHS2 criterion and the overall DHS2 failure should be viewed as indicative only.

2.1 Modelling prevalence

Existing data within the EHS was used to model, where possible, dwellings which would fail DHS2. Annex B provides detailed information on the modelling approach for each component, including where components were not possible to model.

For Criterion C, it was not possible to model whether a dwelling had floor coverings, window restrictors, or whether it met new Minimum Security Standards.

For Criterion D, a proxy measure was created to model the addition of the requirement that a dwelling should have efficient (programmable) heating and the primary heating system must have a distribution system sufficient to provide heat to the whole home.

All dwellings built post 1990 were assumed to have an efficient programmable heating system. For dwellings with electric storage heaters, the EHS does not collect information on whether controls are present, so it is assumed that time and temperatures controls are present unless the system is installed before 2006 (where no controls is assumed).

Criterion E included the proposed requirement that 鈥楬omes should be free of damp and mould鈥�.

The EHS records the presence of 鈥榮ignificant damp鈥� (that which would be considered as part of a Housing Health and Safety Rating System (HHSRS) assessment) under three headings: rising damp; penetrating damp; serious condensation/mould growth. This is recorded in six locations, including one living room and one bedroom. These observations are taken forward to the HHSRS summary, where an overall assessment of damp severity is recorded.

If any damp (under any of the 3 headings above) is present in a surveyed living room or a surveyed bedroom and the overall HHSRS damp score exceeds 20 (FHSDAWALIK LE 180), it is flagged as failing Criterion E.

If there is no living room because the dwelling is small and open plan, the modelling includes whether there is damp in the kitchen. For bed-sits, the main bedroom/ living room is assessed.

The proxy method misses significant dampness in other living rooms and bedrooms that have not been inspected in detail. However, surveyors are told to select rooms that are 鈥榬epresentative in their condition鈥� so they should have inspected at least one living room or bedroom with significant damp. The likelihood of missing significant dampness is less in the rented sectors, where homes generally have less rooms.

2.2 Modelling costs

For this task, costs for each of the components were sourced from:

• the existing EHS Repair Cost Model or
• the existing Cost to Make Safe (CTMS) Model
• the existing EPC improvement model
• new research (for disrepair to lifts and door entry systems)

A summary of the cost variables created and the source of the costs for the modelling is available at Annex B. In addition, Chapter 5 of the 2018-19 provides key information on the EHS models and how they are applied for each of the DHS criteria.

There are a few additional points to note with regards to the modelling:

Disrepair

Research by BRE suggested that it was not possible to quantify the typical cost of repairing a broken lift in common parts of flats for the few instances of lift disrepair identified in the EHS. Furthermore, such cost would be 鈥榮pread鈥� across all homes (and all tenures) using the lift and not just those homes that were non-decent, through service charges. A notional cost of 拢50 per annum (at 2019 prices) was included in the total cost for each non-decent home failing this component.

Similarly, the cost of repairing a broken door entry system for flats would be spread across all homes (and all tenures) using this amenity through service charges. A notional cost of 拢20 per annum (at 2019 prices) was included in the total cost for each non-decent home failing this component.

Some disrepair elements ^{[footnote 1]} are not included in costs due to time limitations during development of the interim Impact Assessment. We expect that the exclusion of these disrepair elements will have a minimal impact on the additional costs. However, we do expect that the total costs are an underestimate because of these exclusions. Further analysis will be undertaken for the final Impact Assessment.

Thermal comfort - Minimum Energy Efficiency Standard (MEES) requirement

There is a huge overlap between this component and HHSRS excessive cold. For the current EHS, a home is excessively cold when it has a Standard Assessment Protocol (SAP) rating of 37.6 or less while homes in the private rented sector (PRS) must attain a SAP rating of at least 39 to be MEES compliant.

In the EHS raw sample data, only 11 dwellings in the PRS were found to be non-MEES compliant but did not have a Category 1 excess cold hazard. Rather than run the EPC improvement model (used to model the measures needed to mitigate excess cold) for all non MEES compliant cases, and cause duplication of costs, the EPC improvement model was applied only to those 11 PRS dwellings. The data were then weighted in the normal way and the cost of the installation work summed.

Duplication of costs

When combining the cost to make decent (CTMD) for each of four DHS2 criterion, the model removes any double counting between across all criteria where feasible. This is done by creating classifications of work which are used to group related mitigation work together. These classifications are:

1. Stairs (cost to mitigate falls on stairs form a classification within this to prevent further double counting of these repairs)
2. Kitchens
3. Bathrooms
4. Windows
5. Heating
6. Electrical
7. Lighting
8. Walls
9. Ceilings
10. Floors
11. Insulation
12. Common areas
13. Other

鈥極ther鈥� classification incorporates types of work that do not fit into classifications 1-12, and are independent of any other jobs. e.g. other repair to external building fabric, installing/repairing extractor fans to fix condensation and the new DHS2 social rented sector (SRS) costs for boundary walls, parking and play areas.

Further cost adjustments

Once the costs for all work classification areas are added together, additional costs are added to account for preliminaries and access equipment to arrive at a total cost to make decent for each dwelling. This cost is then adjusted for regional price variations using the factors below.

Region	Repair cost factor
North East	0.93
North West	0.93
Yorkshire and Humberside	0.93
East Midlands	0.94
West Midlands	0.94
East of England	1.04
London	1.09
South East	1.05
South West	1.02

2.3 Modelling additional costs

Summaries of current landlord responsibilities for PRS and SRS landlords, and the areas identified as requiring additional monetary costs are detailed below.

Modelling the current responsibilities of private landlords

Criterion A. Minimum standard for housing - Any mitigation work for HHSRS Category 1 hazards covers obligations under The Homes (Fitness for Human Habitation) Act 2018. Costs for DHS and DHS2 are therefore the same.

Criterion B. Reasonable state of repair - Any urgent work to key external elements, amenities and services is considered as an obligation under the Landlord and Tenant Act 1985. This will include all of the urgent repairs included in the repair criteria for DHS2. Additional costs will be a sub-set of DHS2, excluding non-urgent repairs.

Criterion C. Reasonable facilities and services - There is no requirement to modernise existing PRS housing. However, there will be significant overlaps with Criteria A and B, when work is required to unsafe homes and those in disrepair. Additional costs in this category are those which do not overlap with Criteria A and B.

Criterion D. Reasonable degree of thermal comfort - The only current requirement to improve energy efficiency in the PRS is meeting EPC E, which has a marked overlap with Criterion A. There will be significant overlaps with Criteria A and B, through work required to mitigate HHSRS Category 1 excess cold homes, and those in disrepair which impact on energy performance. Additional costs in this category are those which do not overlap with Criteria A or B.

Criterion E. Damp and mould - The absence of damp and mould in a home was modelled as being an existing obligation, as required under the Landlord and Tenant Act.

Modelling the current responsibilities of social landlords

Criterion A. Minimum standard for housing - Any mitigation work for HHSRS Category 1 hazards covers obligations under The Homes (Fitness for Human Habitation) Act 2018. Costs for DHS and DHS2 are therefore the same.

Criterion B. Reasonable state of disrepair - The baseline is defined as the current DHS repair criteria costs and/or Landlord and Tenant Act work defined as urgent work to key external elements, amenities and services. This will include all of the urgent repairs included in the repair criteria for DHS2. Additional costs are those above the current costs.

Criterion C. Reasonable facilities and services - The baseline is defined as the current modernisation criteria costs for existing DHS. Additional costs are those above the current costs.

Criterion D. Reasonable degree of thermal comfort - The baseline is defined as the current thermal criteria costs for existing DHS. Additional costs are those above the current costs. Notable overlaps with other 3 criteria.

Criterion E. Damp and mould - The absence of damp and mould in a home was modelled as being an existing obligation, as required under the Landlord and Tenant Act.

Additional Cost Modelling Approach

Using the above definitions, for both the PRS and SRS a new decent homes model was developed that created 鈥榖aseline鈥� variables for each of the individual components within criteria B, C and D. From this, overall baseline pass/fails for each of the 5 criteria and an overall baseline decent homes variable were also created.

Costs were then calculated using the same process outlined above.

This meant that there were 2 costs for every component and criteria of DHS2, i.e. a DHS2 cost and a baseline cost for every component and criteria. The additional cost (i.e. the cost above the baseline) for each component and criteria is calculated by subtracting the baseline costs from the DHS2 costs.

3. DHS2 criteria and components modelled

Not all elements of the revised standard for consultation were able to be included within the model. Below describes the elements which were able to be included.

Criterion A: Statutory minimum standard for housing

To be decent, a dwelling must:

• Be free of Category 1 HHSRS (26) hazards

Criterion B: Reasonable state of repair

A dwelling satisfies this criterion unless:

• One or more 鈥渒ey鈥� building components is not in a reasonable state of repair
• Two or more 鈥渙ther鈥� building components are not in a reasonable state of repair
• Key building components are:
  • External wall structure
  • External wall finish
  • Roof structure and covering
  • Windows
  • External doors
  • Chimneys
  • Heating systems
  • Electrical systems
  • Kitchens
  • Bathrooms
  • Lifts
  • Internal doors
  • Fire alarm systems
  • Sprinkler systems
  • Internal wall finish
  • Ventilation installations

Criterion C: Reasonably modern facilities and services

A dwelling is considered to meet this criterion if it provides at least three of the following facilities:

• a kitchen with adequate space and layout
• an appropriately located bathroom and WC
• adequate external noise insulation
• adequate size and layout of common entrance areas for blocks of flats

In addition:

• Landlords must provide suitable floor coverings for the property at the beginning of the tenancy
• Require that all rented properties must provide child-resistant window restrictors which can be overridden by adult if required on all egress (wide opening) windows on 1st floor level or above
• Use components which are compliant with Building Regulations Approved Document Part Q when doorsets and windows are replaced

Criterion D: Reasonable degree of thermal comfort

To meet this criterion a dwelling must

• Meet Minimum Energy Efficiency Standards (EPC E in the PRS)
• Have efficient [programmable] heating. The primary heating system must have a distribution system sufficient to provide heat to the whole home.

Criterion E: Home is free of damp and mould

• Criterion E will be failed if a damp and mould hazard is assessed to be anywhere from bands A 鈥� H, excluding only the mildest category 2 hazards