What's changed
The Future Homes Standard (FHS) came into effect through Building Regulations changes from 2025. All new homes must now produce 75–80% less carbon than those built to the previous 2013 Part L standards. This is the most significant change to residential building standards in decades.
In practical terms: no more gas boilers in new homes. Heat pumps (air source or ground source) are the default heating system. Insulation, glazing, and airtightness standards are substantially higher. Every new home needs mechanical ventilation with heat recovery.
Key requirements
- Heating: Heat pumps (air source or ground source) replace gas boilers. No fossil fuel heating in new homes.
- Insulation: U-values significantly tightened for walls, floors, and roofs. More insulation material needed throughout.
- Windows: Triple glazing becomes standard (or very high-performance double glazing).
- Airtightness: Homes must achieve much lower air permeability, requiring careful detailing and testing.
- Ventilation: Mechanical Ventilation with Heat Recovery (MVHR) systems required to maintain air quality in airtight homes.
- Overheating: New Part O regulations require assessment and mitigation of overheating risk.
Cost impact on development appraisals
The FHS adds approximately 5–10% to build costs compared to pre-2025 standards. On a per-unit basis:
- Heat pump (ASHP): £5,000–£10,000 per unit (vs £2,000–£3,000 for a gas boiler)
- Enhanced insulation + airtightness: £3,000–£8,000 per unit
- Triple glazing: £1,000–£3,000 more per unit than double
- MVHR system: £3,000–£5,000 per unit
- Design and SAP calculations: £1,000–£2,000 per scheme
For a 10-unit scheme at £200,000 per unit build cost, FHS compliance adds roughly £120,000–£260,000 in total. This must be reflected in your development appraisal and cost schedule.
Impact on GDV
The positive side: FHS-compliant homes achieve higher EPC ratings (A or B), which increasingly affects buyer demand and mortgage availability. Some evidence suggests energy-efficient homes command a 3–5% premium over less efficient properties. As energy costs remain elevated, this premium may increase.
What lenders expect to see
- Realistic cost schedules: If your new-build costs don't include heat pumps and enhanced insulation, lenders will flag it. Costs that don't reflect FHS compliance suggest the developer hasn't properly scoped the project.
- Experienced contractors: FHS requires skills that not all contractors have — heat pump installation, airtightness detailing, MVHR commissioning. Lenders want to see you're using contractors with FHS experience.
- SAP assessment: A Standard Assessment Procedure calculation showing FHS compliance strengthens your application.
Getting FHS-ready finance
When you submit on Assesr, include FHS costs in your cost schedule and specify heat pump and ventilation specifications. The AI credit paper presents your scheme as FHS-compliant, which some lenders view positively — energy-efficient homes have better long-term value and saleability, reducing exit risk.