The goal is for the country to reach net zero emissions of greenhouse gases by 2050.
While this may seem like a long time away, huge changes are already taking place within the country’s built environment, which is estimated to be responsible for around 40% of the UK’s total CO2 output. It is therefore seen as an essential part of the overall ambition, and some significant progress is being made in this space.
Much of this has been sparked by the Future Homes and Buildings Standard, which is essentially a set of changes to the way homes are built and used, starting with a focus on the new-build market.
What is the Future Homes and Buildings Standard?
The idea behind the Future Homes and Buildings Standard is that all residential properties in the UK will be ‘net-zero-ready’ and will not need retrofitting in the future when the net zero target takes effect in 2050. Essentially, when the national electricity grid is ultimately decarbonised, these homes will not need any additional changes to be made in order to operate on a carbon neutral basis.
Furthermore, the goal within the Future Homes Standard is that, from 2025 - in just two short years’ time - all new-builds will produce 75-80% less greenhouse gas emissions than homes built under the old building regulations.
To achieve this, fossil fuel heating systems including traditional gas boilers are expected to be banned in all new homes from 2025. Instead, properties will have modern, energy efficient heat pumps or be connected to heat networks, although this proposal is yet to be finalised.
Full details and technical specifications for this are expected to be consulted on at some point this year (2023), but the proposals will undoubtedly mean some big changes for housebuilders and developers. What’s more, homebuyers and property investors will want to keep abreast of any new developments to stay ahead of the game in terms of purchasing and offering the most appealing, energy efficient homes.
Some changes have already been made
On 15 June 2022, a set of interim amendments of the Future Homes and Buildings Standard came into force. Since this date, all newly built properties have been required to deliver carbon emissions savings of 31% against existing standards.
Two main methods are currently utilised to achieve this: installing modern, energy efficient heating systems in new-builds, and ensuring new minimum standards of building fabrics are used. It means that many of the new-build properties being constructed at the moment are already well on their way to being more future-proof for buyers.
The interim changes for the Future Homes and Buildings Standard also include a new way of measuring energy efficiency in the first place. There are now three performance metrics being utilised: primary energy, CO2 emissions target and minimum standards for fabric and fixed building services.
Measures to prevent overheating in domestic properties have also been brought in, including new glazing limits in new-builds. Electric vehicle provision is a particularly crucial component, too, and all new homes must now have preparatory work completed for any future installation of a charging point for an electric vehicle.
What this means for the property industry
The Future Homes and Buildings Standard is just one piece of the puzzle when it comes to improving the carbon footprints of our properties, and indeed of our daily lives. But there is certainly a growing awareness and willingness to adopt new practices in order to not only help the environment, but to reduce costs over the long term.
The electric vehicle market is a particularly tangible example of this. Sales of electric cars reportedly grew by 40% in 2022, and this is only expected to continue to increase. As more and more low-emissions zones are introduced across towns and cities, alongside rapidly improving electric vehicle infrastructure and charging point provision, the incentives to go down this route are growing.
In terms of the property market specifically, the cost of living crisis has forced households to scrutinise their energy expenditure. As a result, homes with poor energy efficiency are being put under the microscope - and being discounted by growing numbers of people who will no longer be able to afford to heat them. Homeowners, property investors and even tenants are more aware than ever of the EPC (energy performance certificate) ratings of their properties, and this is making energy efficient homes even more desirable.
Since the 2018 Minimum Energy Efficiency Standard (MEES) for rental properties was introduced, there has been a distinctive shift in the behaviour of many property investors, according to some studies.
Under MEES, all properties must achieve a rating of E or higher in order to be legally let out. Increasingly, as awareness of energy efficiency grows, more buyers are seeing the value in opting to purchase newly built homes to increase the longevity of their investment. This is because a vast majority of new-builds - particularly in light of new building regulations - achieve the top A-C EPC ratings.
To shine a light on the full extent of energy bill savings, recent research from Policy in Practice revealed a difference of £1,745 per year between the most energy efficient (A-rated) and the least energy-efficient (G-rated) in the utility costs of a flat or small house.
When looking at larger properties, the difference is even more stark, as the analysis, based on Cornwall Insight’s forecast, British Gas data on energy consumption per household type and Annual Fuel Poverty Statistics in England, 2022, reveals. Average energy bills for an A-rated five-bedroom family home were £2,156 as of October 2022. Yet for those living in a G-rated property, that cost rises to a huge £6,534 per year, and could be set to climb further when the current energy price cap ends.
It is no surprise, then, that tenants in the private rented sector are increasingly seeking out homes with better EPC ratings, and the same can also be said for investors realising how focusing on energy efficiency can massively boost the appeal of their investment properties.
