> The Home Builders Federation (HBF) has published research which says the cost of building a new home has risen £76,000 since 2020, with the biggest single contribution coming from material and labour inflation. A new report from the body, which represents the housebuilding industry, says the additional cost is impacting the viability of new housing development, making it uneconomic for companies to build new homes. The report, called ‘The Viability Crunch’, highlights the 16% drop in completions in 2024/25 compared with the 2020 peak.
> While its report found that increases in material and labour costs due to high levels of inflation were the biggest individual contributor to rising costs, accounting for £37,000 of the increase, the remaining £39,000 was driven by tax and policy changes introduced by the government. This included more than £23,000 in regulatory costs per home, with £7,770 of this relating to building regulation, £5,700 to biodiversity net gain and £10,200 to the future homes standard. Taxes and levies accounted for £7,000 of the increased cost, including £2,000 for the landfill tax, £2,320 for the building safety levy, £2,055 in other taxes, and £985 from inflationary increases on existing charges such as section 106. A further £7,000 related to additional site-specific costs like nutrient mitigation requirements.
> According to its analysis, the increase in cost since 2020 represents more than 20% of the cost of a new home as of June 2025. The HBF argues that policymakers have assumed that rising development costs would ultimately be borne by landowners – an assumption it said was being pushed to its limits. The HBF is calling on the government to introduce a moratorium on new policy costs and conduct a review of current ones. It said this should include a cancellation of the Building Safety Levy and proposed increases to Landfill Tax, which is set to rise every year to 2030.
> “If government wants the private sector to deliver, it must create the right conditions for it to do so,” said Neil Jefferson, chief executive at the Home Builders Federation. “Without urgent action to review and reduce the overall cost burden, the delivery of both private and affordable homes will remain at risk, and people will continue to miss out on the homes they need. Increased taxes and policy costs, alongside suppressed demand due to a lack of affordable mortgage lending and no Government support for buyers, are preventing builders increasing housing supply and putting the Government’s housing ambitions increasingly out of reach.”
Same_Butterscotch273 on
Who’d have anticipated that adding a city sized population to the country every year and market turmoil would have caused problems in the housing market, certainly not me. I would never have seen this coming a mile away.
Spamgrenade on
Yep, its next to impossible to build reasonably priced housing for first time buyers anymore and make money.
I would like to see right to buy scrapped and councils enabled to get building again.
Prestigious_Spot9635 on
What I see happen with expensive new build is a selection of houses are reserved for corporate landlords who rent out the properties. I’ve seen this personally with Hopkins homes. Few nice 3 beds taken straight off reservations ordinary people like me.
uagotapo on
Oh no, the insanely profitable developers will have slightly lower profits!
This is just an industry body kicking up a fuss that their profits will drop a bit, but housebuilding is still insanely profitable. Ofc the developers also want an excuse to point to when people complain of high prices and low supply, but it is in their interests to control the supply of housing, as it keeps prices high. Developers *benefit* from a housing crisis, so they’re not exactly eager to solve it, rather just keep it ticking along nicely, while claiming hardships like this in order to get concessions from government and councils to cut their costs.
throwaway1948476 on
Does this mean house prices are going to shoot up again?
noun_verbed on
For the record, this is how developers get out of their legal obligation to build a small percentage of affordable housing.
The very generous remit they get is that they have to provide that affordable housing *only* if they will make a profit on it. When prices go up they can turn around and say ‘things have changed, it simply has to be 100% luxury flats, our hands are tied’
CalicoCatRobot on
I wonder how many people don’t have enough coverage for rebuilding cost on their home insurance because they took the cheapest quote, and would only find out if the worst happened.
TheL0wKing on
This article (and the original report by the HBF) are trying to present this as a regulation issue but its mostly inflation, with material and labour costs representing £37,000 of the increase alone. Of the other costs it includes taxes like the Landfill tax without mentioning that these have just increased in line with inflation as well, yet are somehow presented as if they are extra charges that have been added. They even include “costs linked to the Future Homes Standard” which is not in force yet and increases the value of the home. Very little of this is actual extra regulation or new requirements, they are just already existing costs.
In fact, inflation since 2020 (from when the article is counting) was around 26%, so this increase in costs is roughly what you would expect. House prices have also increased by a similar amount (location dependent).
NGeoTeacher on
I think part of the problem, which the article doesn’t discuss, is we haven’t really evolved housebuilding techniques in decades. We should be able to build houses far more efficiently, and to a higher standard, nowadays than was possible in the past. For instance, by using prefabs (not shitty ones like we used in the ’50s, but high-quality, German-style prefabs) and 3D printing. We should be putting up houses in a week or less, which is possible with the technology we have nowadays. Houses going up near me are taking months, and the quality is crap compared to what is possible.
Housebuilding companies are typically highly resistant to any change and have a history of lobbying against anything that would actually improve the quality of houses.
Another part of the problem are mortgage providers having resistance to loaning for anything that’s of non-standard construction, so we need changes in regulation here too.
Spiritual_Salary_997 on
I’m not complaining, but I have an unfinished extension in my home. I need some bricks repointing and a wall built. slabbing etc. I need 5k to finish it and every time I get close I’m 500 short. I hate owing builders money
The extension went up during COVID ironically. So glad it was then. Job market has been dire in my area since, loads of supply but no perm work which is stopping me getting a loan
plawwell on
It’s only going to get worse. Homes will continue to skyrocket in price and rents will continue to rise. The days of cheap housing are long gone forever. If you don’t already own or won’t inherit a home then you will need a lot of money.
WinHour4300 on
Land prices should be falling. Instead it looks like long term investors are holding rather than selling at less than it was worth a few years ago. That’s limiting new building as it currently isn’t profitable in many locations at current land prices.
Probably the best way round it is tax and planning policy: introduce an annual high tax on ownership of undeveloped land. Especially that’s marked as potentially suitable for development. Reduce the time to start building after planning permission is granted.
13 Comments
> The Home Builders Federation (HBF) has published research which says the cost of building a new home has risen £76,000 since 2020, with the biggest single contribution coming from material and labour inflation. A new report from the body, which represents the housebuilding industry, says the additional cost is impacting the viability of new housing development, making it uneconomic for companies to build new homes. The report, called ‘The Viability Crunch’, highlights the 16% drop in completions in 2024/25 compared with the 2020 peak.
> While its report found that increases in material and labour costs due to high levels of inflation were the biggest individual contributor to rising costs, accounting for £37,000 of the increase, the remaining £39,000 was driven by tax and policy changes introduced by the government. This included more than £23,000 in regulatory costs per home, with £7,770 of this relating to building regulation, £5,700 to biodiversity net gain and £10,200 to the future homes standard. Taxes and levies accounted for £7,000 of the increased cost, including £2,000 for the landfill tax, £2,320 for the building safety levy, £2,055 in other taxes, and £985 from inflationary increases on existing charges such as section 106. A further £7,000 related to additional site-specific costs like nutrient mitigation requirements.
> According to its analysis, the increase in cost since 2020 represents more than 20% of the cost of a new home as of June 2025. The HBF argues that policymakers have assumed that rising development costs would ultimately be borne by landowners – an assumption it said was being pushed to its limits. The HBF is calling on the government to introduce a moratorium on new policy costs and conduct a review of current ones. It said this should include a cancellation of the Building Safety Levy and proposed increases to Landfill Tax, which is set to rise every year to 2030.
> “If government wants the private sector to deliver, it must create the right conditions for it to do so,” said Neil Jefferson, chief executive at the Home Builders Federation. “Without urgent action to review and reduce the overall cost burden, the delivery of both private and affordable homes will remain at risk, and people will continue to miss out on the homes they need. Increased taxes and policy costs, alongside suppressed demand due to a lack of affordable mortgage lending and no Government support for buyers, are preventing builders increasing housing supply and putting the Government’s housing ambitions increasingly out of reach.”
Who’d have anticipated that adding a city sized population to the country every year and market turmoil would have caused problems in the housing market, certainly not me. I would never have seen this coming a mile away.
Yep, its next to impossible to build reasonably priced housing for first time buyers anymore and make money.
I would like to see right to buy scrapped and councils enabled to get building again.
What I see happen with expensive new build is a selection of houses are reserved for corporate landlords who rent out the properties. I’ve seen this personally with Hopkins homes. Few nice 3 beds taken straight off reservations ordinary people like me.
Oh no, the insanely profitable developers will have slightly lower profits!
This is just an industry body kicking up a fuss that their profits will drop a bit, but housebuilding is still insanely profitable. Ofc the developers also want an excuse to point to when people complain of high prices and low supply, but it is in their interests to control the supply of housing, as it keeps prices high. Developers *benefit* from a housing crisis, so they’re not exactly eager to solve it, rather just keep it ticking along nicely, while claiming hardships like this in order to get concessions from government and councils to cut their costs.
Does this mean house prices are going to shoot up again?
For the record, this is how developers get out of their legal obligation to build a small percentage of affordable housing.
The very generous remit they get is that they have to provide that affordable housing *only* if they will make a profit on it. When prices go up they can turn around and say ‘things have changed, it simply has to be 100% luxury flats, our hands are tied’
I wonder how many people don’t have enough coverage for rebuilding cost on their home insurance because they took the cheapest quote, and would only find out if the worst happened.
This article (and the original report by the HBF) are trying to present this as a regulation issue but its mostly inflation, with material and labour costs representing £37,000 of the increase alone. Of the other costs it includes taxes like the Landfill tax without mentioning that these have just increased in line with inflation as well, yet are somehow presented as if they are extra charges that have been added. They even include “costs linked to the Future Homes Standard” which is not in force yet and increases the value of the home. Very little of this is actual extra regulation or new requirements, they are just already existing costs.
In fact, inflation since 2020 (from when the article is counting) was around 26%, so this increase in costs is roughly what you would expect. House prices have also increased by a similar amount (location dependent).
I think part of the problem, which the article doesn’t discuss, is we haven’t really evolved housebuilding techniques in decades. We should be able to build houses far more efficiently, and to a higher standard, nowadays than was possible in the past. For instance, by using prefabs (not shitty ones like we used in the ’50s, but high-quality, German-style prefabs) and 3D printing. We should be putting up houses in a week or less, which is possible with the technology we have nowadays. Houses going up near me are taking months, and the quality is crap compared to what is possible.
Housebuilding companies are typically highly resistant to any change and have a history of lobbying against anything that would actually improve the quality of houses.
Another part of the problem are mortgage providers having resistance to loaning for anything that’s of non-standard construction, so we need changes in regulation here too.
I’m not complaining, but I have an unfinished extension in my home. I need some bricks repointing and a wall built. slabbing etc. I need 5k to finish it and every time I get close I’m 500 short. I hate owing builders money
The extension went up during COVID ironically. So glad it was then. Job market has been dire in my area since, loads of supply but no perm work which is stopping me getting a loan
It’s only going to get worse. Homes will continue to skyrocket in price and rents will continue to rise. The days of cheap housing are long gone forever. If you don’t already own or won’t inherit a home then you will need a lot of money.
Land prices should be falling. Instead it looks like long term investors are holding rather than selling at less than it was worth a few years ago. That’s limiting new building as it currently isn’t profitable in many locations at current land prices.
Probably the best way round it is tax and planning policy: introduce an annual high tax on ownership of undeveloped land. Especially that’s marked as potentially suitable for development. Reduce the time to start building after planning permission is granted.