The emphasis on energy-efficient and environment-friendly new-builds will drive up the prices of homes in the UK. The Home Builders Federation claims that the changes to regulations and taxes will increase the new build home price by an additional £20,000 in the next couple of years. There is a considerable decline in the demand for newly constructed homes because of the cost-of-living crisis, inflation, and rising interest rates. The recent decision to reduce stamp duty had a negligible effect on the growth of the housing sector. 

Impact of building regulations changes

Energy Performance Certificate (EPC) regulations will control the energy bills in homes for rent or sale in England and Wales. It will encourage better ventilation besides preventing overheating. The regulation will reduce energy bills as the need for heating and hot water will be considerably lower. Most of the new homes have higher EPC ratings. The average electricity bill for new-build homes is half as much as that of older properties, because of the higher EPC ratings. 

Builders must reduce the carbon footprint of newly built homes by thirty percent. Reliable sources estimate that over fifty percent of builders are ignorant about the regulation changes or are not ready to adopt the changes. Landlords must upgrade their properties by 2025 to achieve a minimum EPC rating of C or above to avoid penalties. Lack of energy efficiency will attract higher mortgage rates. Over 15 million homeowners face the prospect of improving their homes by shelling out colossal sums of money. The massive upgrade program may not be viable because of labour shortages. 

Uncertainties galore

There is no clarity about the possibility of receiving government grants to cover the cost of upgrades. There is no specific information about the properties that will be exempt. Landlords are in the dark about how to comply with the government's green agenda. There are several contradictions in the government's approach to eco regulations. The government is pushing for improvements to meet EPC standards while accepting the inadequacy of the EPC system. The shoddy performance of previous eco upgrade policies like the Green Home Grant and boiler upgrade scheme raises more questions about the future of green strategies. 

Eco rules hike new build costs 

Stringent energy efficiency rules are presently adding over £5,000 to the cost of a brand-new home. Developers must absorb the additional costs to meet energy efficiency regulations announced this year. There is an additional burden of paying the levy to raise funds to remove unsafe cladding, thanks to the Grenfell disaster. The highest contributing factor to the hike in the prices of new-build homes in the next three years is the Future Homes Standards mandating new homes to be energy efficient besides facilitating low carbon heating. The additional cost to comply with the Future Homes Standard will probably add to £1.9 billion annually. 

The probable outcome of proposed eco regulations and taxes

The reduction in investments in these sectors will directly affect cost-effective housing and public infrastructure. The cost of increasing taxes and compliance with new eco regulations will hurt the speed and supply of upcoming housing projects. The UK will most likely miss the yearly target of 300,000 newly built homes because of these factors. The situation may be more critical with the rising cost of construction materials, tight labour market, and global supply chain problems. Nobody would oppose the upcoming eco regulations as these will ensure environmental improvements. The main concern is the lack of vision to minimize the impact of these regulations on the future of housing supply and investment. Developers may try to reduce their participation in affordable housing.