The Home Insulation Scheme - Worthwhile?

My last post dovetailed nicely with the launch of the national insulation programme (under the guise of the SEI's The Home Energy Saving Scheme), the governments stimulus for the ailing construction sector, along with the answer to reducing homeowners energy bills. For many it is seen as the answer for tradesmen and builders in sector - with the SEI estimating that it will influence an additional €500m in spending by property owners every year. It is certainly well founded, but is it enough ?

Lets look at the figures

The insulation grants are structured as follows:

CATEGORY GRANT * Maximum Grant Aid
Roof Insulation €250

Cavity wall insulation €400

Internal Wall Dry-Lining €2,500

External wall insulation €4,000

High Efficiency Gas or Oil fired
Boiler with Heating Controls
Upgrade €700

Heating Controls Upgrade €500

Before works and an After
works BER assessment €200

In the interest of brevity, let's look at the best case for a property owner. External wall insulation offers the most efficent insulation solution for the majority of existing homes and is the most expensive. The SEI have estimated the cost insulating the average 3 bed semi D in this manner at about €19,000. (This might be excessive, Onlinetradesmen.com would see it more like €15,000.) In this case the property owner can claim the €4,000 in grant aid. If they wish, they can also claim additional aid amounts in the scheme as part of their overall project - such as the high efficency boiler upgrade and a before and after BER assessment. So the total grant aid for someone looking to insulate, upgrade their heating and get an assesment in this instance would be €4000 + €700 +€500 = €5200. Not bad.

So what does this mean to the tradesman or builder ? To receive this grant aid the property owner will need to spend an average of about €15,000 on external insulation. Factor in another €3,500 for the boiler upgrade. Then €600 for the before and after BER assessments. Total spend is around €20,000, give or take.. An injection of this kind of spending in this scenario will certainly help the tradesmen and builders of Ireland - if it happens.

But what will the reality be ? The above case is a best case scenario. In it the project value is €20,000, the grant aid is €5,200 and the property owner pays out €14,800. Is pure energy saving terms, is this a viable investment ? Not really, as the SEI estimate that the property owner will save an average of €700 per year on their energy bills from doing this work, yeilding a return on investment of some 21 years until breakeven! However, It is when you also consider the potential increase in value of a home with an improved energy rating that the insulation scheme works - Property owners benefit from an increase in the selling price of their home (if they are selling) and landlords potentially benefit from higher rental income from a property with lower running costs. Given all of this, an uptake has to happen as it makes economic sense. So in layman terms the national insulation programme (under the guise of the SEI's The Home Energy Saving Scheme) is pure genius......but.....

It is unlikely that it will bring €500M in additional spending into the tradesmen and builders sector every year as this is based upon the 'best case' scenario above. More likely is a figure of about half of that.

Standards. We need to be careful here. Standards need to be maintained in order to prevent the scheme from becoming a farce - providing a pot of gold like this will attract all sorts of mercenaries from the trade sector. Currently the SEI are asking tradesmen and builders to register who have C2 (tax clearance), Insurance and will sign up to charter which includes a technical specification. Does this mean that they are qualified to do this work ? Say I am, for example, an established landscaper with all the above, can I enrol ? The SEI maintain that they will spot check the work of enrolled professionals but, with respect, it's not an easy task to carry out after the fact.

In summary, all in all it would appear that the government have got something right in the current climate of calamities. Now we just need to hope that it lives up to it's promises.

For more information on the national insulation programme (under the guise of the SEI's The Home Energy Saving Scheme) go to the SEI web site or logon to Onlinetradesmen.com.

Damn Statistics. How qualified tradesmen & builders can win..

Today I found a positive story in the Sunday papers relating to the construction sector. Yippee! Maybe I should frame it. The announcement that minister Eamon Ryan is launching the national insulation programme to boost jobs in the construction sector. Great stuff, Minister!

More on this again, although I wanted to start with some good news before I commented on the latest CSO statistics. Reporting on the the relative health of the sector for tradesmen and builders, its bad news for some but there is something we can do about it..

The facts

The CSO (Central Statistics Office) Quarterly Planning Permissions Granted, Q1 2001- Q3 2008, report makes interesting reading. New constructions aside, (as Onlinetradesmen.com members are primarily focused on extension and refurbishments) Q3 2008 has shown a decrease of 20% in the number of planning permissions granted for house extensions nationwide when compared to the same period in in 2007. In numeric terms, permission for house extensions has dropped from a high in Q3 2007 of 5,210 to 4,166 in Q3 2008 - the lowest number since Q3 2003. The Q3 number is significant as this is the busiest period for permissions annually. In the same period the number of 'House Alteration and conversions' that received planning, was down some 15% in Q3 2008 (711) from Q3 2007 (837).

In addition to the above, the statistics show that in Q3 2008 the average size of extensions granted permission was 112.8 sq. meters (this must include renovations as well). This is down from an average house extension size of 144 sq meters in Q3 2007.

Reasons to be cheerful

OK, granted, there aren't many - but there are some. Planning permission only applies for extensions of 40 sq meters and above, with smaller extensions not registering in the CSO's figures. What the CSO's numbers do reflect are that there is a nationwide trend towards smaller extensions - something that Onlinetradesmen.com can confirm, with significant activity on our service for smaller extension types. What is also ignored are is the non extension related activity within the trade sector. General home improvement have increased nationwide according to figures on Onlinetradesmen.com, with smaller projects such as bathrooms, flooring, painting and decorating up over 15% on previous quarters years.

How to buck the trends

We can't argue that fact that there are now too many tradesmen competing for too little business in the domestic sector here. So something has to give, right ? The knee jerk reaction has been that prices have fallen and the customer, on the face of it at least, has benefited. However, I wonder how sustainable this is. In a race to the bottom nobody will win in the end. In my next blog post I will outline my own thoughts on how tradesmen and builders can differentiate themselves in a tight market and win more business. So, because of time constraints (it is a Sunday!), I'll outline these in the next post and finish with the time honoured phrase of
....TO BE CONTINUED...