The Future Homes Standard has arrived: what it means for residential development

Nearly a decade after the government first committed to it, the Future Homes Standard (FHS) has been enacted. Laid on 24 March 2026 and coming into force on 24 March 2027, it sets a new benchmark for energy efficiency in all new residential buildings across England.

For higher-risk buildings (HRBs), those above 18 metres or seven storeys, a separate date applies. Regulations relating to HRB work come into force on 24 September 2027, reflecting the additional complexity of the Gateway process these buildings must navigate before construction can proceed.

The transitional window is shorter than it might appear. Understanding where your projects sit now, and planning accordingly, is genuinely essential.

Why this matters

Homes accounted for 14% of UK carbon emissions in 2024. Residential buildings are the second highest-emitting sector in the country, and the government’s pathway to net zero by 2050 requires those emissions to fall by 66% by 2040.

The Future Homes and Buildings Standards will ensure that new homes and non-domestic buildings are built with low carbon heating and high levels of energy efficiency, so that buildings constructed to these standards will not require retrofitting to become zero carbon in use as the electricity grid decarbonises.

Heat pumps are a central part of getting there. The government’s own balanced pathway suggests half of all UK homes will need to be heated by a heat pump by 2040. Just 1% are today.

What the standard requires

To understand the FHS, it helps to know how the compliance framework works. Every new home must achieve a defined level of energy performance. The regulations express this through a ‘notional building’, essentially a reference design that acts as a benchmark. Developers do not need to build that exact design, but every new home must perform at least as well as it in terms of energy use, carbon emissions and fabric efficiency.

The FHS notional building includes a heat pump, improved airtightness, decentralised mechanical extract ventilation (dMEV) and a wastewater heat recovery system. Gas boilers are no longer part of this benchmark. That is a fundamental shift, not only in the technology specified but in how homes are designed, serviced and commissioned from the ground up.

Alongside the notional building, the regulations introduce a dedicated functional requirement (L3) for on-site renewable electricity generation. A functional requirement defines what must be achieved without prescribing how, and this distinction matters. 

For most new homes, the expectation is roof-mounted solar photovoltaic (PV) panels covering an area equal to 40% of the ground floor area, meeting specified standards on orientation, pitch and shading. Where that genuinely cannot be achieved due to roof configuration, shading or other site-specific constraints, developers can demonstrate an alternative approach to building control with supporting evidence. HRBs above 18 metres are exempt from the solar requirement entirely, given the limited roof area available relative to the number of dwellings in taller blocks.

This approach to solar, a functional requirement rather than a fixed element within the notional building, came directly from industry feedback during the consultation. The original proposals were seen as impractical for many developments. The revised approach maintains genuine ambition while giving developers meaningfully more flexibility in how they deliver it.

Dates and transitional arrangements

For most new homes, the transitional arrangements work as follows:

• A building notice, initial notice or full plans application must be submitted to the relevant authority before 24 March 2027
• Construction must then commence before 24 March 2028
• If both conditions are met, the building may continue to be built to the 2021 Part L standard

These arrangements apply to individual buildings, not development sites as a whole. Developers cannot rely on a small number of early applications to protect an entire scheme.

For HRBs, the FHS comes into force on 24 September 2027. A valid Gateway 2 application must be submitted by that date, after which construction must commence within three years. Any site with planning consent that has not yet progressed to application stage should be reviewed now.

The cost picture

The government’s impact assessment is clear-eyed about the financial implications. The weighted average capital cost uplift per dwelling is £4,350, varying by dwelling type:

• Mid-terrace houses: around £5,690
• Semi-detached houses: around £5,600
• Detached houses: around £5,160
• Low-rise flats (below 11 metres): around £5,300
• Mid-rise flats (11 to 18 metres): around £2,210
• High-rise flats (above 18 metres): around £1,550

Over the first 10 years of the policy, the combined bill to private developers, private landlords and housing associations is estimated at £7.7bn, or around £709m per year. Around a fifth of capital and installation costs are expected to fall to housing associations.

From a wider societal perspective, the government calculates a net positive social value of just over £11.2bn. The majority is driven by carbon savings worth nearly £20bn, with air quality improvements contributing a further £711m. 

The cost of abating a tonne of CO2 under this policy is estimated at £74, well below the government’s own comparator of £169. By that measure, this is a cost-effective intervention. The government also projects that heat pump costs will reduce by around 30% and solar PV by around 40% over the first decade of the policy as supply chains mature. These trends are credible over time but should not be relied upon in near-term appraisals.

What it means in practice

For developers, the shift from gas boilers to heat pumps changes more than just the heating specification. It affects plant room sizing, electrical load design, commissioning processes and the information residents need to manage their homes well. Crucially, the new Standard targets significant consumer benefits, with the government projecting energy bill savings of over £1,000 per year for a typical semi-detached home. 

For housing associations and registered providers, the challenge is more acute. Social rents are regulated, meaning rising capital costs cannot simply be passed on to residents. The impact assessment acknowledges that providers may need to seek increased grant funding. 

That conversation should begin now, ahead of programme rounds and future spending reviews. The benefits for residents are real and significant: lower energy bills than the average existing home, greater protection from fossil fuel price volatility and healthier, better-ventilated living environments. However, teams must also design with the concurrent review of Part O (Overheating) in mind, ensuring these highly insulated homes remain comfortable in increasingly warm summers.

For consultant and contractor teams, the FHS requires a genuine step up in technical knowledge, particularly around heat pump design, specification and commissioning. The updated Approved Documents include detailed guidance on installation, the importance of following manufacturer instructions and the role of competent person schemes.

The introduction of the Home Energy Model (HEM) alongside the Standard Assessment Procedure (SAP) is also a meaningful change in compliance methodology. Both will run in parallel for at least 24 months, which helps manage the transition. But HEM will eventually replace SAP, and practices that invest in understanding it now will be better placed to support their clients with confidence.

At AHR, we are already integrating HEM into our architecture and building consultancy work. We see it as an opportunity to design homes that perform more closely to their intended specification and to give clients greater certainty in the outcomes they are committing to.

What we think

We are living through a period of genuine global instability. The energy price shocks of recent years, driven by geopolitical events and the inherent volatility of international gas markets, have been a sharp reminder of the costs of fossil fuel dependency. The Office for Budget Responsibility (OBR) has estimated that responding to future gas price spikes could be twice as costly as the entire net zero transition. That is not an environmental argument alone. It is an economic one, and it changes the context in which the FHS should be evaluated.

Against that backdrop, the standard is a well-considered and necessary response. Moving new homes away from gas and towards low-carbon, electrified heating reduces the exposure of the people living in them to volatile international markets. It improves the quality and long-term health of the homes we build. And it reduces the carbon footprint of residential construction in a way that the government’s own analysis confirms is cost-effective.

We also need to be honest about the challenges. Construction costs are under real inflationary pressure. Heat pump supply chains are still maturing and the skills base for installation, design and commissioning of low-carbon technologies needs significant investment to grow at the pace required. For social housing providers working within rent regulations, the financial arithmetic is genuinely difficult and will need active support from government through grant funding.

These are not reasons to delay or dilute the standard. They are reasons to plan carefully, engage early and invest in the knowledge, supply chain relationships and design approaches that will make delivery work. The industry has navigated significant regulatory transitions before and risen to each of them. The purpose behind this one is more urgent. 

The teams that treat the FHS as an opportunity, rather than a compliance exercise, will be the ones best placed to deliver the quality of homes this country needs and to build lasting relationships with clients in doing so.

If you would like to discuss what the Future Homes Standard means for your projects or development programme, our residential team is ready to help. Get in touch