The Future Homes Standard: A Holistic Assessment of Decarbonising Residential Housing in the UK

Abstract

The Future Homes Standard (FHS) represents a pivotal step in the UK’s commitment to achieving net-zero carbon emissions by 2050. This research report provides a comprehensive analysis of the FHS, extending beyond its immediate technical requirements and economic impacts to encompass broader implications for the housing market, energy infrastructure, and societal well-being. We explore the intricacies of the FHS, including the shift from SAP to the Home Energy Model (HEM), airtightness regulations, and the mandated integration of low-carbon heating technologies, particularly heat pumps. Furthermore, the report delves into the policy landscape surrounding the FHS, examining its interaction with existing building regulations, planning policies, and financial incentives. We analyze the potential challenges and opportunities associated with its implementation, paying particular attention to the skills gap in the construction industry, the impact on housing affordability, and the role of innovation in driving down costs and improving performance. Finally, we propose recommendations for policymakers, developers, and homeowners to ensure a successful and equitable transition to a low-carbon housing stock.

Many thanks to our sponsor Focus 360 Energy who helped us prepare this research report.

1. Introduction

The urgency of addressing climate change has spurred governments worldwide to implement policies aimed at decarbonizing various sectors, with residential housing being a significant contributor to greenhouse gas emissions. The UK, committed to achieving net-zero emissions by 2050, has placed considerable emphasis on improving the energy efficiency of buildings, particularly new homes. The Future Homes Standard (FHS), slated for implementation in 2025, is a key initiative designed to achieve this goal. It represents a significant tightening of building regulations, aiming to ensure that all new homes are ‘zero carbon ready’.

This report moves beyond a purely technical evaluation of the FHS to provide a holistic assessment of its implications. While the technical requirements regarding U-values, airtightness, and renewable energy integration are crucial, the FHS’s success hinges on a broader understanding of its economic, social, and environmental impacts. This requires careful consideration of the entire lifecycle of new homes, from design and construction to operation and eventual decommissioning. The report also examines the interplay between the FHS and other policies, such as planning regulations and financial incentives, to identify potential synergies and conflicts.

The primary aim is to provide a resource for policymakers, developers, construction professionals, and homeowners to facilitate a smooth and effective transition to a low-carbon housing stock. This research builds upon existing literature on energy efficiency in buildings, low-carbon technologies, and sustainable development, incorporating the latest developments in policy and technology.

Many thanks to our sponsor Focus 360 Energy who helped us prepare this research report.

2. Technical Requirements of the Future Homes Standard

The FHS mandates a significant reduction in carbon emissions from new homes compared to the current Building Regulations (Part L 2021). The government anticipates that homes built to the FHS will produce 75-80% less carbon emissions than homes built to current standards [1]. This ambitious target necessitates a comprehensive approach, encompassing fabric efficiency, low-carbon heating technologies, and potentially, on-site renewable energy generation.

2.1 Fabric Efficiency: U-Values and Airtightness

Enhancing the thermal performance of the building envelope is a cornerstone of the FHS. Stricter U-values for walls, roofs, floors, windows, and doors will be required, minimizing heat loss during the heating season and heat gain during the cooling season. These values are expected to be significantly lower than current standards, necessitating the use of high-performance insulation materials and construction techniques.

Airtightness is another critical aspect of fabric efficiency. The FHS is expected to mandate stricter airtightness testing and require builders to implement measures to minimize air leakage through gaps and cracks in the building envelope. Improved airtightness reduces energy demand for heating and cooling, improves comfort, and prevents moisture damage. It is likely that the testing methodology will also evolve to ensure more accurate and reliable results.

2.2 Low-Carbon Heating: Heat Pumps as the Primary Solution

The FHS places a strong emphasis on the adoption of low-carbon heating technologies, with heat pumps identified as the primary solution for new homes. Heat pumps, which extract heat from the air, ground, or water, offer a highly efficient alternative to traditional gas boilers. The FHS is expected to effectively mandate the installation of heat pumps in most new homes, although exemptions may be considered for certain types of development or locations. The scale of this change should not be underestimated, particularly considering the UK’s reliance on gas boilers for domestic heating.

The performance and efficiency of heat pumps are highly dependent on factors such as the type of heat pump, the quality of installation, and the thermal performance of the building. Therefore, the FHS will likely include requirements for heat pump sizing, installation, and commissioning to ensure optimal performance. Furthermore, the government may consider providing incentives and training programs to support the widespread adoption of heat pumps.

2.3 Transition from SAP to the Home Energy Model (HEM)

The FHS will likely coincide with a transition from the Standard Assessment Procedure (SAP) to the Home Energy Model (HEM). SAP is the current methodology used to assess the energy performance of dwellings in the UK, while the HEM is a more advanced modelling tool that offers a more detailed and accurate representation of energy consumption. The HEM has the potential to provide more accurate calculations for a range of technologies like heat pumps and renewables, and to incorporate more detailed occupancy patterns.

The transition to the HEM is intended to provide a more robust and reliable assessment of the energy performance of new homes. However, it also presents challenges, including the need for training and expertise in using the new modelling tool. The government will need to provide adequate support and guidance to ensure a smooth transition.

Many thanks to our sponsor Focus 360 Energy who helped us prepare this research report.

3. Economic Impacts

The FHS will have significant economic impacts on builders, developers, homeowners, and the wider economy. These impacts need to be carefully considered to ensure that the FHS is implemented in a way that is both effective and economically viable.

3.1 Costs for Builders and Developers

The implementation of the FHS will increase the upfront costs for builders and developers. These costs will arise from the need to use more expensive materials (e.g., high-performance insulation, triple-glazed windows), install low-carbon heating systems, and implement improved construction techniques. There will also be costs associated with training staff and complying with new regulations.

However, the increased upfront costs may be offset by reduced operating costs for homeowners and increased property values. Homes built to the FHS will have lower energy bills, making them more attractive to potential buyers. Furthermore, as awareness of climate change grows, energy-efficient homes are likely to command a premium in the market.

3.2 Impacts on Homeowners

Homeowners will benefit from lower energy bills and improved comfort in homes built to the FHS. However, they may also face higher upfront costs when purchasing a new home. The extent to which these costs are passed on to homeowners will depend on market conditions and the ability of developers to absorb some of the increased costs.

Furthermore, homeowners may need to adapt to new heating technologies, such as heat pumps. Heat pumps operate differently from traditional gas boilers and require a different approach to heating control. Homeowners may need to receive training and guidance on how to operate their heating systems efficiently.

3.3 Wider Economic Impacts

The FHS has the potential to stimulate economic growth in the renewable energy and construction sectors. The increased demand for low-carbon heating systems, insulation materials, and other energy-efficient products will create new jobs and investment opportunities. The shift to a low-carbon housing stock will also reduce the UK’s reliance on fossil fuels, improving energy security and reducing carbon emissions.

However, the FHS may also have negative economic impacts, such as increased housing costs and reduced affordability. Policymakers need to carefully consider these potential impacts and implement measures to mitigate them.

Many thanks to our sponsor Focus 360 Energy who helped us prepare this research report.

4. Challenges and Opportunities

The implementation of the FHS presents a range of challenges and opportunities for the UK housing market. Addressing these effectively will be crucial for the success of the policy.

4.1 Skills Gap in the Construction Industry

A significant challenge is the skills gap in the construction industry. The installation of low-carbon heating systems, the implementation of airtight construction techniques, and the use of new materials require specialized skills that are currently in short supply. The government needs to invest in training and education programs to address this skills gap and ensure that the construction industry has the capacity to deliver the FHS.

Furthermore, the lack of qualified installers can lead to poor workmanship and reduced performance of energy-efficient technologies. This can undermine the effectiveness of the FHS and erode public confidence in low-carbon housing. Therefore, it is essential to implement robust quality assurance mechanisms to ensure that installations are carried out to a high standard.

4.2 Impact on Housing Affordability

The FHS has the potential to exacerbate the existing housing affordability crisis in the UK. Increased construction costs may lead to higher house prices, making it more difficult for first-time buyers and low-income households to access the housing market. The government needs to implement measures to mitigate this impact, such as providing financial incentives for developers to build affordable low-carbon homes.

Furthermore, the FHS may disproportionately affect rural areas, where construction costs are often higher and access to skilled labor is more limited. Policymakers need to consider the specific challenges faced by rural areas and tailor policies accordingly.

4.3 Innovation and Cost Reduction

Innovation is key to driving down the costs of low-carbon housing and improving performance. There is a need for research and development into new materials, construction techniques, and heating technologies. The government should support innovation through funding for research projects, tax incentives for companies investing in R&D, and demonstration projects to showcase new technologies.

Furthermore, the adoption of innovative construction techniques, such as modular construction and off-site manufacturing, can help to reduce construction costs and improve efficiency. These techniques also offer the potential to improve quality and reduce waste.

4.4 Supply Chain Issues

The implementation of the FHS will significantly increase demand for certain materials and technologies, such as heat pumps, insulation, and high-performance windows. This increased demand could potentially lead to supply chain bottlenecks and price increases. Policymakers need to work with industry to ensure that the supply chain is prepared for the FHS and that adequate supplies of these materials are available at reasonable prices.

Furthermore, the government should encourage the development of domestic manufacturing capacity for these materials and technologies. This would reduce the UK’s reliance on imports and create new jobs and investment opportunities.

Many thanks to our sponsor Focus 360 Energy who helped us prepare this research report.

5. Policy Landscape and Interactions

The FHS operates within a complex policy landscape, interacting with existing building regulations, planning policies, and financial incentives. Understanding these interactions is crucial for ensuring the success of the FHS.

5.1 Building Regulations and Standards

The FHS is a significant tightening of the Building Regulations (Part L), which sets minimum standards for the energy performance of new buildings. However, the FHS is not the only regulation affecting the energy performance of homes. Other regulations, such as those relating to ventilation and water efficiency, also play a role. It is important to ensure that these regulations are aligned and that there are no conflicting requirements.

Furthermore, the Building Regulations are enforced by local authorities, which may have varying levels of expertise and resources. The government needs to provide adequate support and training to local authorities to ensure consistent and effective enforcement of the Building Regulations.

5.2 Planning Policies

Planning policies can play a crucial role in promoting sustainable development and encouraging the construction of low-carbon homes. Local planning authorities can use planning policies to require developers to meet higher energy efficiency standards than those set out in the Building Regulations. They can also encourage the use of renewable energy technologies and sustainable construction practices.

However, planning policies can also create barriers to the development of low-carbon homes. For example, restrictive planning regulations relating to the appearance of buildings or the use of land can make it difficult to implement energy-efficient designs. It is important to ensure that planning policies are flexible and supportive of sustainable development.

5.3 Financial Incentives

Financial incentives can play a crucial role in encouraging the uptake of low-carbon technologies and practices. The government can provide grants, tax credits, or other financial incentives to developers and homeowners who invest in energy-efficient homes. These incentives can help to offset the increased upfront costs associated with the FHS and make low-carbon homes more affordable.

However, financial incentives need to be carefully designed to ensure that they are effective and do not create unintended consequences. For example, poorly designed incentives can lead to fraud or gaming of the system. The government needs to monitor the effectiveness of financial incentives and make adjustments as necessary.

Many thanks to our sponsor Focus 360 Energy who helped us prepare this research report.

6. Recommendations

To ensure the successful and equitable implementation of the Future Homes Standard, the following recommendations are proposed:

• Address the Skills Gap: Invest in comprehensive training and education programs for the construction industry, focusing on the installation and maintenance of low-carbon technologies and sustainable construction practices. Certifications and accreditation schemes should be prioritised to ensure a high level of competence.
• Mitigate Affordability Impacts: Provide financial incentives, such as grants or tax credits, to developers who build affordable low-carbon homes. Explore innovative financing models to reduce the upfront costs for homeowners.
• Promote Innovation: Support research and development into new materials, construction techniques, and heating technologies. Encourage the adoption of innovative construction methods, such as modular construction and off-site manufacturing.
• Strengthen Supply Chains: Work with industry to ensure that the supply chain is prepared for the FHS and that adequate supplies of low-carbon materials and technologies are available at reasonable prices. Support the development of domestic manufacturing capacity.
• Align Policy Frameworks: Ensure that building regulations, planning policies, and financial incentives are aligned and mutually supportive. Provide clear guidance and support to local authorities to ensure consistent and effective enforcement of the FHS.
• Enhance Consumer Awareness: Conduct public awareness campaigns to educate homeowners about the benefits of low-carbon homes and the importance of energy efficiency. Provide clear and accessible information about the FHS and its implications.
• Monitor and Evaluate: Continuously monitor the implementation of the FHS and evaluate its effectiveness in achieving its goals. Collect data on energy consumption, carbon emissions, and housing affordability to track progress and identify areas for improvement. Publish regular reports on the performance of the FHS.
• Embrace Flexibility: Provide flexibility in the application of the FHS to accommodate different building types, locations, and circumstances. Consider exemptions for certain types of development or locations where compliance with the FHS would be excessively costly or technically challenging.
• Encourage Retrofit: While the FHS focuses on new homes, it is essential to address the existing housing stock. Implement policies and programs to encourage the retrofit of existing homes with energy-efficient measures and low-carbon heating systems.

Many thanks to our sponsor Focus 360 Energy who helped us prepare this research report.

7. Conclusion

The Future Homes Standard represents a crucial step towards decarbonizing the UK’s residential housing stock and achieving net-zero carbon emissions. Its success hinges on a holistic approach that addresses not only the technical requirements but also the economic, social, and environmental implications. By addressing the challenges and capitalizing on the opportunities presented by the FHS, policymakers, developers, and homeowners can work together to create a sustainable and equitable housing market for future generations. Careful planning, adequate resources, and a commitment to innovation are essential for achieving the ambitious goals of the Future Homes Standard and creating a low-carbon future for the UK.

Many thanks to our sponsor Focus 360 Energy who helped us prepare this research report.

References

[1] Ministry of Housing, Communities & Local Government. (2019). The Future Homes Standard: Changes to Part L and Part F of the Building Regulations for new dwellings. https://www.gov.uk/government/consultations/the-future-homes-standard-changes-to-part-l-and-part-f-of-the-building-regulations-for-new-dwellings

[2] Department for Energy Security and Net Zero. (2023). Heat pump statistics. https://www.gov.uk/government/statistics/heat-pump-statistics

[3] BRE. (2024). SAP Conventions. https://www.bregroup.com/products/sap-conventions/

[4] UKGBC. (2020). Net Zero Carbon Buildings: A Framework Definition. https://www.ukgbc.org/wp-content/uploads/2020/04/Net-Zero-Carbon-Buildings-A-Framework-Definition.pdf

[5] Committee on Climate Change. (2019). UK housing: Fit for the future? https://www.theccc.org.uk/publication/uk-housing-fit-for-the-future/