Government added £2.6 billion to energy bill on new homes

See the full report on the Green Britain Foundation website

The Code for Sustainable Homes (often referred to simply as “the Code”) was established in 2006 to encourage the construction of more environmentally friendly properties across the UK. It was developed in line with the then Labour Government’s ambition that all new homes should be zero carbon by 2016. In practice, this meant going beyond basic building regulations, with new homes rated on their sustainability across a range of criteria, from energy efficiency to water usage and waste management.

However, in 2015, the Conservative Government scrapped the Code as part of a broader Housing Standards Review. According to our analysis, reversing or weakening these higher building standards has directly led to higher household energy bills and missed opportunities for large-scale carbon reduction. The findings estimate that homeowners in new-build properties between 2015 and 2022 collectively paid an extra £2.6 billion in energy costs that could have been avoided if the Code had remained in place and evolved.

The report is divided into three key areas:

1. The origins and purpose of the Code

2. The financial and environmental impact of scrapping it

3. Potential benefits of retaining (or reintroducing) strong sustainability standards

The Origins and Purpose of the Code

Building a More Sustainable Housing Sector

The Code for Sustainable Homes served as a voluntary national standard for new-build houses, designed to push beyond standard building regulations. Its scope included not just energy and CO₂ emissions but also water usage, materials, surface water run-off, waste, pollution, health, well-being, management, and ecology. Properties received a rating from Level 1 to Level 6, with Level 6 considered ‘zero carbon.’ This rating system was akin to an enhanced Energy Performance Certificate, clearly signalling a home’s environmental performance to both builders and buyers.

Moving Toward Zero Carbon

By setting out progressive targets, the Code sought to mainstream low-carbon technologies and design principles, creating a path for all new homes to reach zero carbon status by 2016. Developers who built to the Code could demonstrate their commitment to reduced operational costs for homeowners, improved insulation, efficient water and waste systems, and overall lower carbon footprints.

The Financial and Environmental Impact of Scrapping It

Rise in Household Energy Bills

One of the central findings of the report is that abolishing the Code removed the regulatory impetus to build to higher sustainability standards. As a result, newer homes constructed from 2015 onwards consume more energy than they would have if the Code’s standards had been mandatory or retained. Over 1.5 million new homes were built during this period. Analysis indicates that collectively, these households have faced approximately £2.6 billion in additional energy costs—money that could have been saved if those new builds aligned with Code Level 6 (the zero carbon standard).

Missed Opportunities for Emission Reductions

Beyond costs to homeowners, scrapping the Code also represents a missed chance for the UK to reduce its overall carbon emissions more quickly. Zero carbon housing was intended to be a major plank in the government’s strategy to decarbonise the building sector. By reverting to or staying with weaker standards, the industry continued with less efficient building practices, effectively locking in higher emissions for decades.

A Weakened Regulatory Environment

According to the report, the primary driver behind dropping the Code was the desire to simplify regulations and reduce perceived red tape. Yet, this action left a gap in setting higher performance benchmarks. While basic building regulations still covered some areas of energy efficiency, the Code’s holistic, tiered approach had set clearer, more ambitious targets. Without it, there was no single system compelling developers to adopt cutting-edge green technologies or designs.

Potential Benefits of Retaining (or Reintroducing) Strong Sustainability Standards

Energy Independence and Lower Bills

Had the Code remained, new homes today would likely be better insulated, incorporate renewable power sources, and require fewer costly retrofits in the near future. Scaling zero carbon standards provides direct financial benefits to households through reduced bills. Over time, cumulatively lower energy consumption across millions of homes could also enhance national energy security by easing reliance on fossil fuels.

Health, Comfort, and Community Advantages

The Code’s criteria extended beyond energy efficiency. It promoted healthier indoor environments—through better ventilation, lower emissions from materials, and improved daylight. This translates into more comfortable living, reduced strain on healthcare systems, and potentially higher property values that reflect better design and construction. Communities benefit as well from reduced local pollution, thoughtful water management, and ecological enhancements (e.g., preserving green spaces or planting to enhance biodiversity).

Public Ownership and Investment in Future Infrastructure

Though the report does not prescribe the same public or co-operative ownership models discussed in other renewable energy contexts, it emphasises that society stands to benefit when regulatory frameworks direct private investment into higher-quality housing. By setting mandatory sustainability goals, governments effectively ensure that the burden of future energy and climate crises is lessened for residents. Strengthening codes could also create new jobs in green construction, retrofitting, and sustainable materials.

Conclusion: A Blueprint for Future Housing Policy

The abolition of the Code for Sustainable Homes in 2015 may have simplified certain regulatory processes for builders, but the ultimate cost has been borne by ordinary homeowners and the environment. As our calculations show, approximately £2.6 billion in needless energy expenses have been passed on to households, alongside the environmental toll of less efficient homes. If the Code’s standards had evolved rather than been abandoned, the UK might have been considerably closer to constructing and scaling genuinely zero carbon homes, in line with broader net zero ambitions.

Looking ahead, the take-home message is that robust, forward-thinking housing standards can serve as a powerful lever for both economic and environmental benefits. Reintroducing or updating a similar framework to the Code could create a powerful blueprint for ensuring new developments meet the sustainability demands of the future, reduce household costs, and contribute to the UK’s climate goals. By focusing on energy efficiency, carbon neutrality, and holistic design principles, the country has an opportunity to align its housing sector with a greener, more resilient future.