In terms of heat the single slow-combustion-wood-fire will be plenty (assuming a good wood supply) to heat this relatively modest space in winter (in Wales).
As for the frost, it might be an issue in a real heavy winter, but Wales is not Canada. Also, the dissapating heat from the building will help, and timber is inherently far better at handling structural stresses than concrete/steel/etc. That said, I hope for his sake the hill-side retaining-wall is built well (well-drained, structurally strong, etc.) to ensure this doesn't happen.
Not saying it won't cause an issue, but I think you overstate the case somewhat.
In Wales, no this isn't likely a problem. However, due to temperatures staying near-zero it can be worse on a structure if it's regularly cycling below freezing at night.
I wouldn't trust the retaining wall if it wasn't at least 20" of masonry when it's laterally unsupported. Flagstone walls here with lime mortar, laterally supported on floor and ceiling cope at around 14" thick, at which point they can support 6' 11" (by the municipal bylaw) of earth, his walls are laterally unsupported, and by law here can't support more than 3' 11" (if built with a strength equivalent to 8" of 15 Mpa poured concrete, locally about a 14" flagstone wall). Well drained soil will help, but when you're building a wall into the face of a hill, you're being stupid and putting your house below-grade.
I seriously expect this house to fail in a bad winter. I would trust this house in warmer climates, but definitely not in anything colder. I'd also like to know if this guy got approval by a structural engineer, because I certainly didn't read it when I glanced over.
In terms of heat the single slow-combustion-wood-fire will be plenty (assuming a good wood supply) to heat this relatively modest space in winter (in Wales).
As for the frost, it might be an issue in a real heavy winter, but Wales is not Canada. Also, the dissapating heat from the building will help, and timber is inherently far better at handling structural stresses than concrete/steel/etc. That said, I hope for his sake the hill-side retaining-wall is built well (well-drained, structurally strong, etc.) to ensure this doesn't happen.
Not saying it won't cause an issue, but I think you overstate the case somewhat.