Article | Creating Resilience

What is the 2025 Future Homes Standard and how will it impact residential real estate?

February 1, 2023

By Ed Franks

Residential building estate

Heating and powering buildings accounts for 30% of the UK’s total energy usage, so our homes will play a vital role in the UK’s efforts to reach net zero carbon emissions. In 2025, compliance with the Future Homes Standard (FHS) will become mandatory. Its aim is to ensure that new homes built from 2025 will produce 75-80% less carbon emissions than homes built under the current Building Regulations.

The FHS aims to decarbonise new homes by focusing on improving heating, hot water systems, and reducing heat waste. This will be achieved in part by replacing current technologies with low-carbon alternatives. For example, very high quality building fabric (structural materials, insulation etc.), triple glazing standards and low-carbon heating through heat pumps will replace their older, less efficient counterparts. It is anticipated that this, combined with additional regulation targeting existing homes, will contribute to reducing the UK’s carbon emissions and achieving its net zero target by 2050.

To meet the specifications set out in the 2025 FHS, the Government updated Parts F and L of the current Building Regulations at the end of 2021. These specifications must be adhered to when constructing, extending, or renovating UK homes. Part F introduces new standards for ventilation, while Part L sets out minimum energy efficiency performance targets for buildings, airtightness requirements and improved minimum insulation standards. These more rigorous requirements have applied to UK homes since June 2022.

Implementation Timeline

As it is still in development, the implementation and technical details for the FHS have not yet been confirmed, but we anticipate the following:

Phase 1: Consultation and Policy Development

  • Spring 2023 – Technical consultation on the proposed specification of the FHS

Phase 2: Full FHS Implementation

  • 2024 – FHS Implementation consultation
  • 2025 – FHS regulations come into effect

The Road to the 2025 Future Homes Standard

The uplifts to Parts F and L of the Building Regulations were designed to increase the energy efficiency of homes while being a precursor to the eventual specifications of the FHS. By taking this interim step, it is anticipated that the construction industry will be better placed to meet the specifications of the FHS in 2025 through improved supply chains, skills, and construction practices.

However, during the consultation on the uplift to Part L, there were concerns that the uplift was not ambitious enough in its targeted emissions savings. This raises questions about whether the revised part L is enough to prepare the residential sector for the FHS.

The FHS is a positive step forward for the residential market and is one part of the puzzle to help the UK achieve its net zero target. If implemented correctly, it will be an important reference point for valuers. The Standard will provide guidance for market participants to identify the residential assets which are well positioned in the transition to decarbonised real estate. 

However, there is a risk that the costs of implementing the FHS will feed through to increase prices if, for instance, higher standard building fabrics raise costs. Still, the benefits of decarbonised UK housing will be felt by residents, as increased energy efficiency reduces the costs of bills and contributes a cleaner environment.

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