Using Equity Release to Fund Home Energy Upgrades Under the Future Homes Standard

What the Future Homes Standard requires

The Ministry of Housing, Communities and Local Government (MHCLG) published the Future Homes Standard on 24 March 2026. Building Regulations come into force from 24 March 2027. From that date, all new homes built in England must use low-carbon heating systems — principally heat pumps — and meet a 75% reduction in carbon emissions compared to the 2013 standard.

Solar panels form a key part of meeting the new fabric energy efficiency targets, alongside high levels of insulation, triple glazing, and mechanical ventilation with heat recovery. A new home built to the Future Homes Standard will have running energy costs significantly lower than a comparable older property.

The Standard applies to new-build homes. Existing homeowners are not legally required to retrofit to meet these specifications. However, the direction of travel is clear: the gap between the energy efficiency of new and older homes is set to widen, with implications for EPC ratings, energy bills, and eventually property values and mortgageability.

The growing pressure on existing homeowners

While retrofitting is not yet a legal requirement for existing homes, several pressures are converging that make energy upgrades increasingly difficult to defer:

• EPC C target: Government policy has long signalled a target of EPC C for all homes. Although mandatory deadlines for owner-occupiers have not been confirmed, lenders and valuers are beginning to factor EPC ratings into lending decisions and valuations.
• Rising energy bills: Homes with inefficient heating systems continue to carry higher running costs. A heat pump combined with solar panels can substantially reduce dependence on gas and electricity from the grid.
• Resale expectations: As the Future Homes Standard takes effect, buyers comparing new and older properties will increasingly factor in energy running costs. Properties with poor EPC ratings may face growing price discounts at sale.

For homeowners who intend to remain in their property for many years, acting on energy efficiency now could improve both comfort and long-term value.

What do energy improvements actually cost?

The costs vary considerably depending on the property type, age, and what is already in place. Indicative costs reported in June 2026 by Landlord Today include:

• Air source heat pump installation: £7,000 – £15,000 (including installation and associated pipework and radiator upgrades)
• Solar panel installation: £5,000 – £10,000 for a typical domestic system
• Full retrofit (heat pump, solar, insulation, glazing): can exceed £25,000 for older or larger properties

These are substantial sums for many homeowners, particularly those who are retired or living on pension income. Savings in energy bills over time can offset costs, but the upfront capital requirement remains a barrier for many.

The Government's Warm Homes Fund targets lower-income households and may cover some or all of the costs for eligible recipients. However, for homeowners above the income threshold, the funding gap remains significant.

How equity release could fund the work

For homeowners aged 55 and over, equity release — most commonly through a lifetime mortgage — could provide the tax-free lump sum needed to fund energy improvements without the need to sell, downsize, or make monthly repayments.

A lifetime mortgage allows you to borrow against the value of your home. The loan, plus rolled-up interest, is repaid from the proceeds of the property sale when you die or move into long-term care. There are no monthly repayments required, though many modern products allow voluntary partial repayments to limit the compounding effect if you choose to make them.

Releasing £15,000 to £30,000 to fund a heat pump and solar installation could:

• Eliminate or substantially reduce gas bills
• Improve your EPC rating, potentially to band C or above
• Increase the property's appeal and value at the point of eventual sale
• Future-proof the property against evolving regulation

Energy improvements that increase EPC ratings can, in turn, support the property valuation used by equity release lenders, potentially improving how much you could release.

Retirement interest-only mortgages as an alternative

If you are able to service interest payments from pension or other income, a retirement interest-only (RIO) mortgage may offer a lower long-term cost than a standard lifetime mortgage. Under a RIO mortgage, you pay interest monthly, so the capital balance does not compound over time. The capital is repaid from the property sale when you no longer need the property.

The right product depends on your income, age, property value, and broader financial circumstances. A regulated adviser can compare both options across the market and identify the most cost-effective approach for your specific situation.

What you should do next

Before committing to any funding route, it is important to get regulated financial advice. FCA-qualified advisers can help you weigh the full cost of different funding options, including the long-term impact on your estate and any effect on means-tested benefits. There is no obligation at any stage.

Verity Home can compare equity release and retirement interest-only products across the market — so you can be confident you are accessing the most competitive and appropriate solution for your circumstances, rather than the first product you find.

Learn more: Equity release explained, Lifetime mortgages, Retirement interest-only mortgages