IN Brief:
- The Home Builders Federation says £76,000 has been added to the cost of building a new home since 2020.
- The figure includes taxes, levies, regulatory costs, labour, materials inflation, and site-specific mitigation costs.
- The trade body says development viability is weakening as housing delivery remains under pressure.
The Home Builders Federation has warned that taxes, regulation, policy requirements, labour, and materials inflation have added £76,000 to the cost of building a new home since 2020.
The trade body’s report, The Viability Crunch, says the rising cost burden is making development unviable across parts of the country. Annual housing completions fell to 208,000 in 2024/25, down 16% from the 2020 peak, with pressure now affecting both private and affordable housing delivery.
The £76,000 figure includes more than £7,000 in taxes and levies, over £23,000 in regulatory costs, £37,000 in increased labour and materials costs, and around £7,000 in potential site-specific costs, including nutrient mitigation. The HBF says the increase represents more than 20% of the average new home value of £365,000.
Policy-related costs include the forthcoming Building Safety Levy, Biodiversity Net Gain requirements, building regulations, and costs linked to the Future Homes Standard. The report also highlights the effect of inflation on Section 106 agreements and landfill tax, alongside broader cost pressure from supply chain disruption and higher construction input prices.
The HBF argues that the long-standing assumption that land values can absorb new development costs is reaching its limit. If a landowner’s return falls too far, land may not come forward. That puts pressure on planning obligations, affordable housing contributions, scheme design, and the timing of starts.
The warning comes as housebuilding is already under strain from weaker demand, higher mortgage costs, planning uncertainty, labour shortages, and tighter funding conditions. Planning reform may improve the flow of permissions, but permission alone does not create viable construction. Sale values, build costs, regulatory requirements, finance costs, and land prices all need to align before projects proceed.
The pressure is particularly acute for smaller housebuilders. Larger developers can spread compliance, procurement, and finance costs across multiple sites and longer pipelines, while SMEs are more exposed to upfront obligations, delayed sales, and site-specific abnormal costs. The Building Safety Levy has also drawn criticism because it will apply across new homes, including those delivered by companies with no historic involvement in high-rise residential development.
Neil Jefferson, chief executive of the HBF, said reforming planning while adding more policy costs was like having “one foot on the accelerator and the other on the brake”.
A viability squeeze affects the wider construction supply chain. Fewer viable schemes mean thinner pipelines for groundworks, materials, plant hire, roofing, scaffolding, M&E, housebuilding trades, and finishing contractors. If developers renegotiate obligations, delay phases, or redesign projects, the effect moves quickly through procurement, specification, programme, and employment.
The report adds pressure for a more joined-up approach to housing delivery. Regulation, taxation, sustainability requirements, remediation policy, and construction capacity are often treated as separate files, but they land on the same development appraisal. Without clearer coordination, new housing targets risk being undermined by the cumulative cost of delivering each home.
