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Green Building Bible, Fourth Edition
Green Building Bible, fourth edition (both books)
These two books are the perfect starting place to help you get to grips with one of the most vitally important aspects of our society - our homes and living environment.

PLEASE NOTE: A download link for Volume 1 will be sent to you by email and Volume 2 will be sent to you by post as a book.
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Fundamentals: The economics of a house.

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  1.  
    • CommentAuthortony
    • CommentTimeSep 14th 2009
     
    Should the costs of running a house be calculated over the lifetime of the house or over our occupancy of that house?

    It seems selfish to me to work things out over the short or medium term.
    • CommentAuthorjon
    • CommentTimeSep 15th 2009
     
    "Should the costs of running a house be calculated over the lifetime of the house or over our occupancy of that house?"

    Lifetime. The costs of running properties should be an important economic consideration and applied to the valuation of the house in the same way as certain makes of car (devalue because of running costs). At the moment, most people don't bother to look at this when buying but it may become a value indicator in the future.
  3.  
    Why not both...?

    J
    • CommentAuthorjon
    • CommentTimeSep 15th 2009
     
    Occupancy makes financial sense if subsequent purchasers do not put a value on the subsequent costs that they will incur.

    Lifetime makes financial sense if prospective purchasers value subsequent running costs or one takes the moral viewpoint that one should build to look after the interests of subsequent purchasers (even if they don't realise what has been done)
    • CommentAuthorTuna
    • CommentTimeSep 15th 2009 edited
     
    Surely the problem with lifetime costs is that the value of a house doesn't decrease on a known curve to zero. Cars are easy to calculate as the depreciate in a predictable way. Houses on the other hand are assets that (can) increase in value, and also have the associated land value that remains even if the house crumbles to dust. So at least in the mind of the British public, a house doesn't simply cost x/year to run.

    Then when you look at the cost of components that might be replaced during the lifetime of the house (windows, central heating, lighting, appliances), how can you predict with any accuracy the future cost or possible efficiencies available when replacement occurs?

    You could do a calculation that gives both current running costs and 'time to live' of major components, along with costs at current prices for replacement. So you'd get a report saying something like:

    ............. Running costs ......... Estimated time to replacement ....Replacement cost .... Replacement cost over lifespan

    Heating ...... £200/yr ............. 5 years ........................... £3000 ................ £600/yr
    Lighting ...... £50/yr ............. 10 years ............................ £1000 ................. £100/yr
    Appliances ..... £75/yr ............... 3 years ............................ £1500 .................. £500/yr

    Total........... £325/yr ............................................................................... £1200/yr <- You need to save


    Such a report could then give the same figures for 'best practice' replacements, and for appropriate insulation upgrades for comparison.

    (Edited to try and fix table)
    • CommentAuthorjon
    • CommentTimeSep 15th 2009 edited
     
    Posted By: TunaSurely the problem with lifetime costs is that the value of a house doesn't decrease on a known curve to zero. Cars are easy to calculate as the depreciate in a predictable way. Houses on the other hand are assets that (can) increase in value, and also have the associated land value that remains even if the house crumbles to dust. So at least in the mind of the British public, a house doesn't simply cost x/year to run.


    It does in some countries but appears not to in the UK: The value of development rights goes up and down in the UK like a fiddler's elbow and is often higher than the remnant building value. This means that the public do not appreciate that the underlying value of the dwelling should depreciate on a curve and this has the impact that the underlying value does not always follow a curve. In a country such as Australia, you can value a property almost exactly using the development value and then applying an S curve depending on the construction type (value increases marginally in the first few years then goes on a decreasing exponent).

    In the UK, it doesn't work like that so if you're going to do something for the benefit of society (lifetime) you have to take a moral view rather than a financial one.

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