Dane Westwood, performance bond construction specialist at construction bond provider CG Bonds, explains why building greener homes is key to solving the UK’s housing and climate challenges, and what’s in it for developers and residents alike.
The UK is struggling to keep up with housing demand. Build rates remain too low, rental costs are climbing faster than earnings, and for many, the idea of homeownership is slipping further out of reach. Meanwhile, the built environment accounts for around 40% of the UK’s carbon emissions, putting the construction sector under growing pressure to decarbonise.
With the government targeting 1.5 million new homes by 2030, the industry faces a tough question: can we build enough, and build them right?
Growing backlog
Despite estimates that 300,000 new homes are needed each year, just 210,320 were completed in 2022/23. With a backlog of 4.3 million homes in England alone, the impact on affordability is clear. In the 12 months to November 2024, average rents rose 9.1%, with some households spending over half their income on rent.
The pandemic also exposed great inequalities in housing, as people with gardens and more space fared better during lockdowns than those in cramped urban flats. As a result, demand is shifting towards homes that offer more space, better ventilation, and access to green areas, all factors linked to long-term sustainability.
Retrofitting isn’t enough
Much of the UK’s housing stock is old and inefficient. Without strong regulations, new homes risk locking in carbon emissions for decades. The Future Homes Standard, aimed at improving new builds, has been delayed until late 2025, creating uncertainty for developers and local authorities. While interim measures like mandatory solar panels are positive, they fall short of guaranteeing long-term performance.
It’s more cost-effective to build green from the outset. Investing in high-quality insulation, ventilation, heat pumps, and low-carbon materials may increase upfront costs, but reduces energy bills and maintenance over the home’s lifetime.
Buyers want greener homes
Sustainability is no longer just a policy goal, it’s influencing buyer preferences. A 2024 Oxford Economics report found buyers pay 3.4% more for homes rated EPC A or B compared to Band D. Similarly, 57% of consumers said they’d pay extra for homes with features like solar panels, heat pumps, or EV chargers.
This shift isn’t only about climate concerns. Rising energy bills and financial pressures mean buyers and tenants want homes that are warm, affordable to run, and support good health.
Lessons from the EV market
The rise in UK electric vehicle sales, from under 60,000 in 2018 to over 900,000 in 2024, wasn’t driven solely by climate targets. Instead, tax incentives, lower running costs, and convenience played key roles. The housing sector can learn from this. By focusing on comfort, savings, and resilience rather than emissions alone, sustainability becomes a natural choice for buyers.
Planning and skills must improve
Good homes aren’t enough without better planning. Since 2010, the UK has lacked coordinated regional planning, weakening efforts to manage housing growth alongside transport and climate resilience.
Debates about the Green Belt show how tricky this is. People want more homes, but building densely often meets resistance, while expanding into protected areas doesn’t make housing any more affordable.
A smarter approach would balance building and protecting land, focusing on delivering affordable, sustainable homes where people want to live, with proper infrastructure and transport links.
Meeting net-zero and housing targets won’t be possible without addressing a major skills shortage. The Construction Industry Training Board estimates the sector will need an additional 350,000 workers by 2028. While recent government investment in technical colleges is a positive step, ongoing training and apprenticeships will be essential to avoid a widening green skills gap.
The economic case for green building
Building sustainably may add some upfront cost, but the long-term benefits are clear. Energy savings and lower maintenance costs make green homes better investments for residents and landlords alike. For developers, embracing sustainability is becoming a key competitive edge in an increasingly discerning market.
Conclusion
The housing crisis and climate emergency are deeply linked. As the pandemic showed, poor housing quality and bad planning hit the most vulnerable hardest. The homes we build now will shape affordability, emissions, and public health for decades. Green homes offer more than just a climate solution, they promise a fairer, healthier, and more resilient future for everyone.
