Heatrae Sadia Comment: Q3 2019

Jeff House, Head of External Affairs Baxi Heating UK (incorporating Heatrae Sadia) is BMBI’s Expert for Water Heating.

Economic indicators paint a mixed picture of the quarter. The latest from the seasonally adjusted CIPS UK Construction total activity index rose to 44.2 in October, well below the neutral 50 reading. Readings below 50 signal negative growth. Despite the increase, the figure is still close to June’s ten-year low. The Construction Products Association (CPA) trade survey for Q3 reports a positive performance for light side products although heavy side product sales fell.

Demand continues to be affected by the uncertainty surrounding Brexit, and the snap election in December increases the uncertainty.

The Energy and Utilities Alliance (EUA) Economic Report for September shows boiler sales down 5% in September, although year to date sales were ahead by 0.5%. Hot water cylinder sales were up 10.3% in the month, but 1.0% down in the year to date.

The Energy Company Obligation (ECO 3) scheme, the government initiative designed to reduce CO₂ emission and tackle fuel poverty, helped to boost boiler volumes. Similarly, the Renewable Heat Incentive (RHI) scheme continues, promoting a range of heating products in our sector.

The ‘Future Homes Standard’, which I have highlighted throughout this year, has now reached an important stage. Proposals for changes to Approved Documents L and F of the Building Regulations specific to the residential new build sector are now open to consultation. I urge all those who will be affected to contribute before the deadline of the 10th January 2020. The consultation from the Department of Housing, Communities and Local Government also seeks views on the longer term, stating that the ‘Future Homes Standard’ will require new build homes to be future-proofed with low carbon heating and world-leading levels of energy efficiency. It will be introduced by 2025.’

We expect the requirements of revised regulation in the heating industry to change the existing product mix in commercial and residential new build designs. More interest in electric heating, and subsequently more potential use of hot water cylinders, is anticipated. Architects and developers will look to source products whose usage will impact positively on the compliance calculations for new build properties.

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Launched in 2015, the award winning monthly Builders Merchant Building Index (BMBI) report is the only reliable measure of repair, maintenance & improvement (RMI) activity in the UK. Filling an important gap, it can be widely used in construction, and by economists, Government, national media, commentators and influencers outside the industry.