The Future Homes Standard (FHS) is finally arriving. According to Property Week (24 March 2026), from March 2028, every new home built in England must include a heat pump (a device that extracts heat from outside air or ground to warm the property) or be connected to a heat network (a system of insulated pipes that delivers heat from a central source to multiple buildings). Solar panels covering the equivalent of 40% of the building's ground floor space are mandatory. And the gas network? Closed to new builds entirely.

The government published the standard on 24 March after a delay from its original 2027 target. The rules apply in England only - Scotland, Wales, and Northern Ireland have separate building standards and are not covered by this requirement.

What this means is straightforward: the carbon footprint of a new home will drop by 75% compared to one built to 2013 standards. This shift aligns with the government's net zero target by 2050.

For property investors, this is a cost and a benefit rolled into one.

The Compliance Costs

New-build prices will rise. Developers will pass on the cost of heat pump installation, solar arrays, and heat network connections to buyers and investors. Heat pump installation and solar arrays are not cheap upgrades. Developers are currently calculating exact impact, but the compliance costs will be factored into the purchase price, not charged separately.

The good news: you're buying future-proofed stock. An EPC (Energy Performance Certificate) rating near A or B becomes standard, not an exception. That matters when you let the property.

Energy Bill Savings and EPC Ratings

Tenants pay lower energy bills. Lower bills mean higher yields - tenants can afford higher rents because their running costs are lower. That's the offset to your higher acquisition cost.

The 75% emissions reduction isn't just environmental spin. It translates to measurable energy performance. A new home built to FHS standards will run at half or less the energy cost of a 2013-standard property of the same size.

EPC C minimum for new tenancies is already driving retrofit costs for older stock. From 2028, all new competition will come from homes at EPC A or B. If you own older properties, the gap between your stock's efficiency and new builds widens, which affects both rental demand and sale value.

What Happens Next

Developers are now working through the detail. Some are front-loading new projects to beat the deadline and avoid full FHS compliance. Others are building compliance into 2028-launch schemes. This creates a two-tier market - pre-standard and post-standard new build stock - which will show different valuations and rental profiles within months of March 2028.

If you're acquiring new-build investment stock now or in the next two years, factor FHS compliance into your appraisals. Speak to your surveyor about how pre-standard and post-standard pricing will differ. And think carefully about whether it's better to acquire now at pre-standard prices or wait until 2028 when competition and cost clarity improve.