Future Homes Standard

How will the Future Homes Standard affect the property market?



During this year’s Spring Statement, chancellor Philip Hammond announced that a Future Homes Standard would be introduced by 2025.

The standard will ensure that new-build homes are future-proofed with low-carbon heating and world-leading levels of energy efficiency.

It builds on the prime minister’s industrial strategy grand challenge mission to at least halve the energy use of new buildings by 2030.

As a result of this latest initiative, Development Finance Today set out to discover how the standard will affect the UK property market.

Future Homes Standard

How will the Future Homes Standard impact the UK property market?

Michael Dean, principal at Avamore Capital, said that the standard wouldn’t affect existing stock and so there wouldn’t be a huge impact on the property market.

“Where we could start to see a difference is with build costs on new homes increasing in order to comply with the standard. 

“Some schemes, which are only marginally viable now, will become increasingly difficult to complete under the standard.”

Despite this, Henry Smith, CEO at Aitch Group, believed that the implementation of the Future Homes Standard was much more likely to have a direct impact, unlike the old, off-setting principle, such as the feed in tariff.

“As the implementation of [the] Future Homes Standard is still six years away, technology is highly likely to improve within that period that build costs are not affected…

“The impact in London will also be less as there is already a requirement to achieve better fabric performance than the regulations [in] the London Plan; although outside of London, where targets are lower at present, there will be a larger impact. 

“In essence, by the time the standards are implemented, the property market will have regularised the position and have adopted the standards.”

Future Homes Standard

Could other homes be down valued as a result of not being up to the same levels of energy efficiency?

“More and more consumers are looking for more sustainable, low-cost housing, so new-build homes with such measures in place are likely to be more desirable than existing and dated stock,” Henry added.

“However, so many factors affect the valuation of the property, [but] having the latest technology and energy-efficient requirements will only help that particular property stand out and the demand for five-year-old-plus properties may well decrease over time.”

Michael didn’t think that there would be a down valuation of existing stock unless we reach a point at which you can not sell the property because it does not comply with the standard.

“Furthermore, new-build homes have always had a premium over second-hand homes and so we are unlikely to see much of a difference in market dynamics.”


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