Future Homes Standard: does the detail leave us feeling cold?

By Dr Jonathan Marshall, Head of Analysis

Published:02 October 2019

Britain’s building stock is one of the stickiest parts of our society from which to cut greenhouse gases. Carbon emissions from the residential sector have edged higher since reaching a low in 2014, with homes responsible for more than a fifth of national energy consumption.

Action to tackle emissions from the nation’s building stock has been in short supply, but back in 2008 a policy was devised to ensure that all new properties adhered to high efficiency standards, thereby limiting their impact on the climate and locking in lower energy bills for inhabitants.

Cancelled to both widespread surprise and derision in July 2015, Zero Carbon Homes (ZCH) would have seen all new homes built since the start of 2016 have tight controls over energy use. Since it was axed there has been no major policy in place to improve the environmental credentials of new homes, until an announcement from the Housing Secretary yesterday.

Future Homes Standard

Robert Jenrick's department have published some much-awaited detail on the Future Homes Standard
Robert Jenrick's department have published some much-awaited detail on the Future Homes Standard

Trailed by former-Chancellor Philip Hammond in the 2019 Spring Statement, the Future Homes Standard (FHS) is expected to fill the hole left by the cancellation of ZCH. And with a consultation now out with headline figures targeting a 75-80% reduction in CO2 emissions compared to current standards, and a decline in energy use that corresponds to a £257/year saving on energy bills, it looks like a good plug to fill the hole.

Commitment to ensure that the gas grid is not extended to new homes also persists from Hammond’s announcement, while an interim 2020 target could see new properties being built without gas boilers from as soon as next year.

An average new property uses (in theory, more on this later) 60-65 kWh of energy per square meter, per year for space heating. Compare this to the Committee on Climate Change's (CCC) 15-20 kWh/m2/year target and it is clear that there is some distance to go. Space heating is the largest form of energy use in the home, so strong ambition here is essential.

There is also welcome action on addressing the 'Performance Gap', whereby buildings do not perform as well in real life as they do in models. Estimated at adding up to £260 on annual energy bills by the CCC, the problem of underperforming homes is almost as big an issue as homes not being built to high enough standards.

A major driver of the Performance Gap is poor build quality, so tackling it would not only cut bills and improve the household budgets of families in affected homes, but would also see the overall quality of their homes increase.

There is also a nod to another problem resultant from builders cutting corners, in this case around testing for air tightness. A more air tight home makes it harder for heat to escape, meaning less heat needs to be generated. The consultation targets developers that only perform air tightness tests on a single home out of a whole estate, assuming the results apply to the rest of the houses. A huge loophole that should, rightfully, be closed.

Costly delay

Higher efficiency standards lead to lower energy bills
Higher efficiency standards lead to lower energy bills

While first impressions of the FHS are generally good, it is hard to discuss it without a thought on what could have been. ZCH should have been implemented at the start of 2016, meaning that the ~160,000 homes built in England each year would be adhering to better standards.

Coming into force in 2025 instead means that there will be more than 1.4 million homes built since the start of 2016, assuming constant housebuilding rates, the vast majority of which have far from ‘world-leading efficiency standards’.

Around 85% of new properties are rated ‘B’ on the EPC (Energy Performance Certificate) scale, with just 1% attaining A standard. Shockingly, 4% of new homes are still rated as D.

Retrofitting homes to standards compliant with the UK's newly adopted net zero emissions target will be vastly more complicated than building them to perform well in the first place. It may also be a harder sell to convince someone with a recently-built home to retrofit it – potentially needing tailored policy action – than someone with an older property where the bill savings will be even greater.

Watering down

Familiar foes to the FHS will not be impressed with details in the consultation. Homebuilders balk at the extra cost of building homes to higher standards, even though they represent less than 7% of the profit made on each new home. They also have a powerful lobby group, with the ability to slow the number of new homes built and move the Government even further away from its target of overseeing the construction of 300,000 new homes per year.

Curtailing expansion of the gas grid and an explicit backing of heat pumps will also likely rile the gas networks and groups representing manufacturers of boilers and other gas-fuelled appliances.

There have already been rumours that these two groups are trying to water down the consultation, while a major housebuilder recently admitted it had been lobbying against the ZCH up to its untimely demise.

Fortunately, the mood both in Westminster and in public has changed. PR disasters around shoddy homes, Help-to-Buy pushing up prices and therefore profits,and massive bonuses weaken the housebuilder’s arguments, and the fact that we have already gone through this once before will likely concern the government.

The consultation contains a decent amount of information; therefore, it should be easy to see if any parts of it are diluted. Definitely one to watch over the next few months.

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