The average home now costs £76,000 more to build in 2020, according to new research from the Home Builders Federation (HBF).
A wave of new taxes, levies and regulations introduced in recent years are driving the growth, affecting multiple stages of the building process from planning to completion, the report said.
We look at what is specifically responsible for the rise in government orders Cost of building a house And what recommendations are made to reduce the burden on home builders.
How much has the cost of building a home increased?
This of HBF Viability crunch report It is estimated that £76,000 has been added to the cost of building an average new home since 2020.
It says this is equivalent to more than 20% of the average new house price of £365,000.
The increase consists of:
- From over £37,000 material and labor inflation
- Approximately £23,000 from regulatory costs
- Over £7,000 from taxes and levies
- Around £7,000 from site-specific requirements such as environmental mitigation measures
What taxes, levies and regulations are to blame?
The report points to a series of policy changes introduced as the main drivers of higher costs from 2020.
This includes Building safety levyDue to come into effect in 2026, that will apply to all new homes. It also highlights the rise Landfill taxhigh Section 106 Contribution to, and introduction to, local infrastructure Biodiversity net gain Regulations that require developers to purchase environmental improvements or credits.
It points further Future Homes StandardThat will require high energy-efficiency standards, including low-carbon heating systems. Building regulation Changes covering water efficiency, accessibility, digital connectivity and more EV charging infrastructure
The report states that these measures are adding significant new cost levels on top of construction inflation.
How do these changes affect delivery?
The combined effect of rising costs and regulation makes it difficult to deliver more housing schemes, the report said.
It highlights that environmental requirements can be difficult to meet on-site, while off-site solutions such as biodiversity credits are often limited and expensive. It also points to increasing regulatory complexity across multiple standards, which adds both cost and delay to projects.
As a result, he warns, more sites are failing viability assessments, reducing the number of homes that can realistically be built.
Industry Alert for Govt
The Home Builders Federation is calling for a review of the combined impact of taxes, levies and regulations introduced from 2020.
It urges the government to refrain from further cost-increasing measures and re-evaluate existing policies, including the building safety levy and landfill tax hike.
HBF chief executive Neil Jefferson said: “While the industry supports the ambition behind some of these policies, little thought has been given to their combined impact. The fact that house completions have been slow clearly shows that simply planning improvements is not enough and that other pressures are at play.”
He added: “If the government wants to deliver to the private sector, it should create the right conditions for it. Without immediate action to review and reduce the overall cost burden, the delivery of both private and affordable homes will be at risk.”
