Building towards Sustainability: the UK's Future Homes and Buildings Standards

1.1   What it does in a nutshell

The FHS represents the most significant change to energy efficiency requirements for new homes in England in over a decade. Published on 24 March 2026, it requires all new dwellings in England to be "zero-carbon ready". The standard does not apply to existing housing stock and carries no retrofit obligations. Whilst the detail is complex (and many technical challenges and ambiguities will need to be solved), the core proposition and intent is straightforward: new homes built to the FHS should not need any physical intervention to become zero-carbon once the grid decarbonises. This is a future-proofing standard, not an immediate zero-carbon mandate.

1.2   Background

Successive governments have tried for some time to regulate the "homes of the future".

In 2006, Gordon Brown announced an ambitious goal to progressively improve the energy and carbon standards in Building Regulations, with a "zero carbon" target for all new dwellings by 2016. This was to be supported by tighter energy efficiency standards and a scheme that would allow housebuilders to deliver equivalent carbon savings off site. Some progress was made with the 2013 uplift to Part L of the Building Regulations (Part L 2013), but it was not until 2019 that the concept of the FHS became a stated government commitment once more. Successive delays in finalising the standard were driven by a combination of factors, including: supply chain immaturity (particularly in heat pump manufacturing and installation), housebuilder lobbying, political reluctance and wider economic turbulence (including the post-COVID supply chain crisis and the energy price shocks following Russia's invasion of Ukraine). On 15 May 2024, the government stated that the FHS would come into force sometime in 2025, following a series of consultations – but again that target was missed amidst economic and political turbulence. Against this backdrop, the FHS's publication represents the culmination of close to two decades of policy development.

1.3   Legislative framework

The FHS was finally published on 24 March 2026 and has been implemented via amendments to the Building Regulations under The Building Regulations etc. (Amendment) (England) Regulations 2026 (the "Regulations") and through the publication of new statutory guidance that provides practical advice on ways of complying with the requirements of the Regulations. As a devolved matter in the UK, the FHS will apply to all new dwellings in England only.

The fundamental purpose of the FHS is to create a "zero-carbon ready" standard: 

"New dwellings built to this standard will not require any retrofit work to achieve zero carbon emissions in use, once the electricity grid is fully decarbonised."

This is significant. The FHS does not make homes zero carbon immediately – instead, the FHS works to future-proof dwellings, so that once the grid has decarbonised (the government's stated target being 2030), these homes will automatically achieve zero operational carbon without further physical intervention. Crucially, the FHS imposes obligations on new dwellings only. There is no obligation to retrofit existing dwellings.

1.4   Technical Specifications

The FHS specification is set using a "notional building" approach: a reference building sets tailored performance targets, and developers' designs must match the same level of performance in terms of energy usage, carbon emissions, and fabric efficiency.

The notional building specification suggests using a heat pump, on-site renewable generation, tighter fabric and airtightness standards, mechanical ventilation and wastewater heat recovery. Collectively, these changes would allow new FHS homes to achieve the performance target for carbon emissions, being at least 75% lower than the 2013 Part L baseline under the FHS. Importantly, these standards are not absolute: they are accompanied by a bundle of guidance which provides technical specifications, and details for when it may be deemed reasonable to diverge from the standards. Further, higher-risk buildings ("HRBs"), which are at least 18m/7 storeys tall and contain at least two residential units, care homes or hospitals, are exempt from the on-site renewables requirement.

The FHS also introduces the Home Energy Model (HEM), a new compliance methodology that will eventually replace the existing Standard Assessment Procedure (SAP). At present, only SAP (version 10.3) is approved to demonstrate FHS compliance, with HEM expected to be approved within approximately three months of the FHS taking effect. Once approved, SAP and HEM will "dual run" for at least 24 months before SAP is retired. Critically, HEM is expected to make it significantly harder to offset poor fabric performance with renewable technology bolt-ons, closing the well-documented "performance gap" between modelled and actual energy performance.

1.5   Transitional Provisions

The transitional arrangements for the FHS will be an area of focus and potentially debate. There will be a 12-month period between the legislation being laid and coming into force, followed by a further 12-month transitional period. In practice, this means that developers wishing to build to the existing standards (i.e. avoid incurring the additional design effort and expense that complying with the FHS will inevitably involve) have until 24 March 2027 to submit a building notice, initial notice or full plans application to the relevant local authority. Work must then be commenced on the dwelling before 24 March 2028. The transitional process differs for HRBs, which must submit a successful application to the Building Safety Regulator within 18 months of the FHS legislation being laid, with a further three years from that application to commence construction.

1.6   Changes in Energy Efficiency Requirements for Let Property: MEES and EPCs

The passing of the FHS into law has coincided with a (separate) update in changes to the Minimum Energy Efficiency Standard (MEES) Regulations. The MEES makes it unlawful to let residential property below a minimum Energy Performance Certificate (EPC) rating, which is currently Band E. The government has confirmed that the MEES Regulations will be raised to a minimum of Band C, alongside changes to EPC methodology (with HEM expected to replace SAP) to determine what will be required to achieve a "C" rating. All tenancies within scope must comply by 1 October 2030. FHS-compliant homes should be inherently resilient to this tightening, but properties built to older standards may require costly retrofitting to ensure compliance. 

2.1   What it does in a nutshell

The FBS applies the same regulatory logic to new non-domestic buildings and was published on the same date as the FHS (24 March 2026).

The FBS establishes a zero-carbon ready standard for all new non-domestic buildings in England. As with the FHS, the objective is that new non-domestic buildings will not require retrofit to achieve zero operational carbon once the electricity grid is fully decarbonised.

It is worth noting that the FBS applies to all new non-domestic buildings, which encompasses a very broad range of building types: offices, retail units, warehouses, industrial buildings, hotels, schools, hospitals (subject to specific provisions), leisure facilities, and mixed-use developments (where the non-domestic elements may be subject to FBS and the residential elements to FHS, depending on configuration). The diversity of the non-domestic stock means that the practical impact of the FBS will vary significantly by sector.

2.2   Technical requirements

Like the FHS, the FBS uses a "notional building" approach to set performance targets for new non-domestic buildings. The notional building specification for non-domestic buildings assumes low-carbon heating (typically heat pumps or, for certain building types, connection to a heat network), enhanced fabric performance, improved airtightness, and energy-efficient building services (including lighting and ventilation). The FBS requires new non-domestic buildings to achieve a minimum reduction in carbon emissions compared to current Part L2 (2021) standards, though the precise percentage reduction varies by building type and use class given the diversity of the non-domestic stock. The FBS also accounts for the significantly different energy profiles of non-domestic buildings (where lighting, cooling and ventilation loads may dominate over heating), and the notional building specifications are therefore tailored by building category. As with the FHS, on-site renewable generation forms part of the notional building specification, though the requirements may differ depending on building type and roof area constraints.

2.3   Transitional Arrangements

The transitional arrangements mirror those of the FHS: a 12-month period between laying and coming into force, followed by a 12-month transitional period, totalling 24 months.

The FHS and FBS represent a step-change in the cost and complexity of delivering new buildings. For example, for homes, the government's FHS Impact Assessment estimates an average capital cost uplift of approximately £4,350 per dwelling (weighted average, 2025 prices). However, government impact assessments have historically tended to understate real-world compliance costs, and there is a material risk that this figure proves conservative, particularly given current global supply chain volatility and the anticipated spike in heat pump demand. While significant operational savings for occupants can be expected over the longer term, these may initially be marginal, with heat pumps increasing electricity demand and the unit price of electricity being substantially higher than gas.

Key points for investors and developers to bear in mind:

• Design complexity. building form, fabric choice, orientation and layout become significantly more important under the FHS and FBS, as compliance turns on factors such as solar gain, overheating risk and fabric efficiency that were less critical under previous regulations. The standards will fundamentally affect the design of many developments – making the short transition period an even greater challenge.
  
  
• Tenant green lease obligations and service charge implications. For multi-let commercial buildings, the FBS's technical requirements (particularly around mechanical ventilation, heat pump systems, and enhanced building management systems) will affect service charge budgets and the allocation of operational responsibility between landlord and tenant. Green lease provisions and service charge caps may require revisiting for new FBS-compliant buildings.
  
  
• Mixed standards on single sites. For the FHS in particular, as the transitional provisions operate per building rather than per site, homes across a single development may be delivered to different standards depending on when foundations are completed, creating material complexity for MEES compliance, operational costs and long-term asset management.
  
  
• Developer cost pass-through. Increased compliance cost means the allocation of cost increase risk between developers and purchasers and operators will require careful contractual treatment, particularly in a volatile supply chain environment.
  
  
• Planning interaction. Some local authorities already impose energy standards above Building Regulations. The FHS may supersede some of these, but does not address whole-life carbon, embodied carbon or other sustainability metrics that sit outside the Building Regulations framework. Similar considerations will be needed for the FBS, where the interaction with particular metropolitan requirements (such as those in London) will be particularly complex. There is also a question as to whether FBS-compliant buildings will automatically achieve higher BREEAM ratings (or equivalent) or whether the two frameworks will diverge on certain metrics. Developers targeting institutional investors who require minimum BREEAM ratings should not assume that FBS compliance alone will satisfy those requirements.
  
  
• Change-of-law risk. The regulatory landscape around energy performance methodology (SAP to HEM), EPC ratings and MEES thresholds remains in flux. Development agreements and forward investment planning should account for the likelihood of further material changes within a short timeframe.
  
  
• Defects and warranty. The new standards require technologies and construction techniques (heat pumps, enhanced airtightness, dMEV) that are new to many developers at scale. This may increase defects risk in the short to medium term. It may also affect insurance and warranty cover.
  
  
• Contractual force majeure and supply chain provisions. Given the acknowledged risk of supply chain bottlenecks (particularly in heat pump supply), construction contracts and development agreements should be reviewed to ensure that force majeure, extension of time, and supply chain disruption provisions adequately address the scenario in which FHS/FBS-compliant components become unavailable or subject to significant lead times.
  
  
• Skills gap and contractor risk. The new standards presuppose a workforce capable of delivering to materially higher specifications. The current skills gap in heat pump installation, airtightness testing, and mechanical ventilation design/commissioning represents a delivery risk that may manifest as programme delays, quality defects, or increased subcontractor costs. This is a practical consideration for procurement strategy and contractor due diligence.

Crucially, the new standards are future looking: there are no retrofit obligations. While the standards will ensure that developments built from the relevant date are zero-carbon ready, most of the UK's existing stock will not be touched by these regulations. However, the carbon efficiency of that stock will need to be addressed. Recent Climate Change Committee calculations suggest that if the UK is to meet its Net Zero targets, buildings and surface transport must bear a dramatically larger share of the remaining reductions required over the next decade, as shown in the following chart.

Source: UK Climate Change Committee:  Progress in reducing emissions – 2025 report to Parliament

This means retrofit remains very much on the policy agenda. When it comes to dwellings, the FHS Impact Assessment recognises that "retrofitting homes to an FHS equivalent standard is likely to come at a higher capital cost than building these in at the design stage". Addressing this gap will require a range of interventions beyond the scope of the FHS itself. On 24 March 2026 the government announced a parallel initiative to make "plug-in" solar panels (low-cost, portable panels that households can install on balconies or outdoor spaces, without the need for a professional electrician) available in UK retail shops within months. The technology allows households to generate solar power and feed it directly through a standard mains socket, reducing the electricity drawn from the grid and cutting energy bills. These represent one route by which the emissions gap in existing buildings might begin to be addressed, but the scale of the retrofit challenge ahead remains immense.

It is tempting, in light of high-profile rollbacks of corporate ESG commitments and political scepticism in certain jurisdictions toward sustainability disclosure regimes, to conclude that the regulatory pressure on sustainability is easing. However, a closer examination of operational, industry level regulation shows that this is not the case. That is seen in many of the EU's product regulatory initiatives; and is seen here in the UK's building regulations.

The distinction is important:

1. Disclosure-based frameworks (such as TCFD reporting, corporate net-zero pledges, and certain ESG fund labelling regimes) are subject to political headwinds and are, in some jurisdictions, being scaled back or made voluntary.
2. Operational regulatory standards (such as the FHS, FBS, the EU's recast Energy Performance of Buildings legislation, MEES, product regulations) are mandatory, binding, and continuing to tighten. Non-compliance is not a reputational risk; it is a legal prohibition.

For developers, investors and asset managers, the practical implication is clear: regardless of one's view on the broader debate, the buildings being designed, financed and constructed today must meet standards that are materially more demanding than those of even two years ago. The direction of travel is one-way, and early engagement with these requirements will be significantly less costly than late adaptation.