28 October, 2015 | Clare Parry

Imagine, for a moment, that you are a developer, or even just a property investor. You believe you have found a way to guarantee that the properties you own are hotly contested on the open market, both those you build new and those you are upgrading. When you build residential developments, interest is so intense that you need to use a ballot system to ensure fair access to all bidders. Even though you are spending around 5-10% more on the build process than your competitors, these costs are fully recouped and your bottom line is thriving. Your tenants are extremely satisfied with their accommodation, their cost for heating and cooling is less than $50 a year, although apartments do not even have electricity meters, as the cost to install and bill tenants far outweighed the cost of the energy used. You now spend nothing on marketing, as the market comes to you, demanding your product with fervour. Your projects serve as icons in the market – architecturally brilliant, energy efficient, low-to-zero vacancy rates and ultra-low operations and maintenance costs.

You also use this model to deliver social housing – the kind that provides excellent living spaces for those who need them most, healthy and with very low occupancy costs. Money previously spent on essentials such as heating, light and power are now spent on other aspects of living. And there’s even evidence to support the notion that these homes are actually enhancing the health outcomes of the residents, reducing the burden on local health system. How fantastic is that?

The first story is that of the ABG Frankfurt group. When they first decided to trial a Passivhaus development their CEO predicted that they wouldn’t sell at all, with the 5% higher capital investment demanding a higher selling price. They were unprepared for the response and were forced to use a lottery system to handle the demand. The decision not to install electricity meters was one of logic – the costs for installation and billing administration was many times greater than the energy cost itself. This move required the company to lobby local government to change local regulations requiring the meters. Vacancy rates are almost negligible, and the company has now built 4,000 new Passivhaus apartments and has a policy that they will never do otherwise[1]. Of their 50,000 apartments they own in Frankfurt, two-thirds have been retrofitted for energy efficiency in line with the principles of the standard. ABG now call themselves “the Passivhaus Maker”[2].

The second story is largely hypothetical, although ABG do great work in this space. However, the broader opportunities are being explored by a number of developers and social housing providers.

So what’s so great about Passivhaus for affordable and social housing?

Health and wellbeing are the primary foci of Passivhaus; energy efficiency, building durability and longevity and the wonderful ‘side effects’. You get comfort and great indoor air quality as standard and fresh, filtered air is delivered through a ventilation system all the time. The reduction in risk factors for respiratory illnesses and cold-related issues, as well as general quality of life concerns, is a major positive for the application of the Passivhaus measures. The benefits have been identified by the community housing organisations in the UK, with cold, uninsulated home being being responsible for an increase in deaths of around 20% in winter. Largely avoidable, but critically linked to build quality and further exacerbated by severe fuel poverty.

The beneficiaries of social housing have the most to gain from such design standards – the provision of comfortable conditions as well as the removal of issues such as damp, mould and allergens means that the home is well placed to support those who most need it. The potential flow-on benefit to the health sector is significant; a factor that the NHS in the UK has realised. In Oldham, London, the health service has partnered with a social housing group to invest in comfort measures such as insulation and new boilers for 1,000 homes[3], an investment that will recoup costs in under one year as they save hundreds of thousands of pounds in hospital admissions and other social costs. As an added benefit, each home is expected to save up to ₤450 a year, alleviating some local issues with fuel poverty. But, as well as direct costs, the proponents of the project also cite increased quality of life as a major benefit.

The flow-on benefits for social housing built to the Passivhaus standard – and let’s not discount alleviating health issues, fuel poverty and general quality of living – include lower maintenance costs, greater asset durability and flow-on economic benefits to the community in general. As one of the occupants vouches: “I was in a freezing council house which I used to pay £35 a week to heat, way more than 10% of our income, and it was still cold… It was a breeding ground for illness. They should definitely build more like this”.

[1] Frank Junker, Chairman ABG Frankfurt Holding, at the international Passivhaus Conference, 2013
[2] AGB Frantfurt: We are the Passivhaus makers, http://www.abg-fh.com/bauen/passivhaus/, viewed 28th Oct 2015
[3] Vidal, J., 2013, Actively cutting energy bills in Oldham – welcome to the ‘Passivhauses’, The Guardian, http://www.theguardian.com/environment/2013/nov/01/cutting-energy-bills-oldham-passivhaus

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