Property: residential housing research

The real cost of poor housing

2 May 2014

Simon Nicol discusses important research sponsored by the BRE Trust


We would all agree that poor housing equals poor health, but can we quantify the costs to the NHS of treating housing-related health problems? BRE Trust sponsored research is using health and safety risk data from the English Housing Survey (EHS) combined with treatment cost data from the NHS that aims to:

  • identify hazards in the home
  • measure their impact on occupants' health and safety
  • quantify the costs and benefits to the NHS of reducing these hazards to an acceptable level.

Background

In Victorian England, many diseases were known to be associated with unsanitary, cold, damp and overcrowded housing. Problems of disease associated with 'slum' living have now largely been eradicated but there remains a number of health and safety hazards, compounded by the fact that England has one of the oldest housing stocks and lowest rates of housing replacement in the developed world.


Problems of disease associated with 'slum' living have now largely been eradicated but there remains a number of health and safety hazards

For the purpose of this research, poor housing has been defined as that which fails to meet the current minimum standard of housing in England, i.e. that has one or more Category 1 Housing Health and Safety Rating System (HH SRS) hazards. It focuses on health outcomes, backed up by research and statistics.

The HHSRS

This identifies defects in dwellings and evaluates their potential effect on the health and safety of occupants and visitors. It provides a means of rating any hazard, differentiating between those that are minor and those where there is an immediate threat of major harm, or even death. There are 29 potential HHSRS hazards, although, as Figure 1 shows, only 15 were identified in any significant number in the EHS.

At the time of this research, the latest EHS results available were from the 2006 survey. Some 4.8 million (22%) of England's 22 million homes were identified as having a Category 1 hazard and deemed to be 'poor housing'. More than half were considered to be poor because of the exposure of the household to a Category 1 risk from excess cold. The great majority of the remaining Category 1 hazards relate to falls.

Costs

The EHS also collects the costs of remedial work when an HHSRS hazard has been identified. These are not for the eradication of the hazard, but to reduce it to an acceptable level.

The average cost for making Category 1 hazards acceptable is £3,710, although this varies considerably. Around a quarter of these hazards can be made acceptable for less than £600, e.g. fitting handrails or changing the cooker position.

The total costs of dealing with Category 1 hazards are some £17.6bn, dominated by those for making cold homes more comfortable, work which includes updating heating systems and providing insulation (see Figure 1).

Category 1 hazards

Figure 1: The frequency of Category 1 hazards

Other costs

Professor Peter Ambrose's comprehensive review of poor housing lists the potential costs, categorising them in terms of their measurability. Our research focuses on NHS treatment costs alone, which has enabled us to conclude that treating Category 1 hazards accounts for a maximum of 40% of the total cost to society.

Next, we described treatments for the outcomes for the different hazards, which could then be totalled using NHS data; these suggest that the total cost to the NHS is some £600m annually at 2010 prices.

Health cost benefit of housing interventions

Clearly, we cannot afford £17.6bn to fix every Category 1 hazard in England immediately. But the assumptions and outputs of this research have enabled us to design a cost-benefit tool to inform strategies for dealing with poor housing and target improvement works. An example spreadsheet uses the EHS-derived data for 'falls on stairs' and other assumptions of this research. It can be used to calculate the health costs benefit of several scenarios since it is possible to change the following:

  • the hazard to be considered
  • the scenario to be applied (all up front, annual payment, no change)
  • the number of properties to be improved
  • the proportion of properties to improve (all, cheapest 20%, cheapest 50%)
  • flexibility in value of costs and benefits
  • different discount rates for Net Present Value calculations.

In the example spreadsheet, the scenario 'all upfront' has been applied. This shows that if the £1.9bn required to reduce the Category 1 stair hazards in England was spent now, the treatment costs to the NHS would be recouped
within five years, with a cumulative benefit of more than £9bn in 25 years.

These spreadsheets have been developed for several HHSRS hazards and used to demonstrate to English local authorities the health cost benefits of their interventions to improve poor housing. The spreadsheet can be equally applied to the national housing stock and individual home improvements; the methodology has been developed into an online Housing Health Cost Calculator tool to help authorities detail the cost savings to the NHS and wider society. 

Energy improvements

Using this methodology, the benefits to the NHS of bringing homes with excess cold hazards back to an acceptable level are disappointing and do not appear to be cost-effective in health terms alone. This is because the averages (the 'acceptable level') used in the HHSRS guidance are historically low and do not reflect either the current average or the standards that energy-efficiency improvements are achieving.

Further research commissioned by the BRE Trust suggests that if all the English housing stock with a Standard Assessment Procedure (SAP) below the historic average of 41 is brought up to at least the current average of 51 through heating and insulation improvements, the health cost benefit to the NHS would be some £750m per year.

 The cost benefit of energy improvements

Before: Household in fuel poverty. Solid, uninsulated stone walls; partial double-glazing; small amount of roof insulation; off-peak storage radiators; electric immersion heater.

SAP: 22, annual fuel cost: £965, CO2 emissions: 8,972kg a year, HHSRS Band A (Category 1 hazard)

After: Household not in fuel poverty. Cost of upgrade: £3,528. Condensing gas boiler and radiators; top-up loft insulation; full double-glazing.

SAP: 59, annual fuel cost: £461, CO2 emissions, 4,666kg a year, HHSRS Band F. Payback to NHS: 7 years

The case study (above) shows that basic energy-efficiency improvements to a terraced house can halve the energy consumption and carbon emissions, bring a low-income household out of fuel poverty and pay back the investment in savings to the NHS within 7 years.

Conclusions

Because of the way that information on the HHSRS is now collected through the EHS and the availability of good-quality data from the NHS on the costs of treating the outcomes of HHSRS hazards, it is now possible to quantify the cost to society of poor housing in England.

The total cost is some £600m per year in terms of the savings in the first year of treatment costs to the NHS if the hazards were removed or reduced to an acceptable level; the full cost to society could be some 2.5 times greater when such factors as reduced educational attainment, lower productivity, mental wellbeing and aftercare costs are taken into consideration.

These costs may seem quite low, but this research has focused on reducing the worst hazards in the worst 22% of the housing stock, rather than eradicating them or raising the standard of all housing to an optimum level. This pragmatic approach has the earliest payback period in terms of cost savings, although some may regard it to be unambitious in the longer term where we should be aiming for ever higher housing standards.

Our research has shown that simple home-safety improvements are very cost-effective. Energy improvements are most cost-effective when they take a household out of an HHSRS Category 1 (SAP below 35) to create a comfortable, affordable home with a SAP of at least 50.

The cost-benefit tool is a practical outcome of this research, helping local authorities to justify expenditure on private sector housing renewal and target the most cost-effective improvements on vulnerable people in unhealthy housing. This research is being used to present a more informed case to UK government for housing investment.

Simon Nicol is Group Director for Housing and Energy at the Building Research Establishment

Further information

Related competencies include: Housing maintenance, repair and improvements, Housing management and policy, Maintenance management