The cost of building a new home has risen by £76,000 since 2020 with mounting taxes, regulation and inflation pushing housing developments into unviable territory across large parts of the country, according to new research from Home Builders Federation.
The HBF’s latest report, The Viability Crunch, warns that growing financial pressures are contributing to a sharp fall in housing delivery, with just 208,000 homes completed in 2024/25 – down 16% from the 2020 peak.
The report found that increased construction costs now represent more than 20% of the average value of a new home.
According to the analysis, more than £37,000 per home has been added through higher labour and material costs linked to inflation and supply chain disruption, while regulatory costs have increased by over £23,000.
BUILDING REGULATIONS
This includes costs associated with Biodiversity Net Gain rules, building regulations and the forthcoming Future Homes Standard.
Developers are also facing more than £7,000 in additional taxes and levies per property, including the upcoming Building Safety Levy, higher Landfill Tax and inflation-linked increases in Section 106 contributions.
The HBF warns that apartment developments in particular are becoming increasingly difficult to deliver, especially in London, where building safety compliance and regulatory requirements are adding an estimated £22,000 per apartment.
The industry body says the cumulative impact of these costs is undermining the viability of both private and affordable housing delivery, despite Government planning reforms designed to increase supply.
RIGHT CONDITIONS TO BUILD
Neil Jefferson, Chief Executive Officer at the Home Builders Federation, says: “The Government’s ambition for new homes relies heavily on private home builders to deliver, yet it is not providing the conditions for these businesses to operate.
“While the industry supports the ambition behind some of these policies, there has been little consideration of their combined impact.
“The fact that house completions have remained slow clearly shows that planning reform alone is not enough and that other pressures are at play.
“Reforming the planning system and reintroducing housing targets for local authorities was a vital first step in boosting supply but doing so while layering on more taxes, levies and policy costs is akin to having one foot on the accelerator and the other on the brake.
“If Government wants the private sector to deliver, it must create the right conditions for it to do so. 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.”
The HBF is calling on the Government to suspend further increases in Landfill Tax, cancel the Building Safety Levy due in October 2026 and introduce a moratorium on additional policy costs affecting housebuilding.
