HBF research reveals impact of new regulations
Research carried out by the Home Builders Federation (HBF) has found that £76,000 has been added to the cost of building a new home since 2020.
The report – The Viability Crunch – examines the impact of policy, taxation and regulation pressures which have resulted in a dramatic rise in the cost of building a new home.
The estimated additional £76,000 cost to build per home is made up of:
- More than £7,000 in taxes and levies, including £2,000 in Landfill Tax and £2,320 from the forthcoming Building Safety Levy;
- More than £23,000 in regulatory costs, including £7,770 for Building Regulations, £5,700 for Biodiversity Net Gain and £10,200 in costs linked to the Future Homes Standard;
- £37,000 in increased material and labour costs due to high levels of inflation;
- £7,000 in additional potential site-specific costs such as nutrient mitigation requirements.
The increase, says HBF, represents more than 20% of the average new home value of £365,000 (as of June 2025).
Neil Jefferson, Chief Executive at the Home Builders Federation, said: “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.”
Housebuilding fall drives gloomy outlook
A fall in housebuilding work has driven the steepest decline in construction output since November 2025, according to the latest Purchasing Mangers’ Index from S&P Global.
The index, which tracks changes in activity, fell to 39.7 in April from 45.6 in March.
Civil engineering activity registered the steepest decline (35.3), followed by house building (38.2). Survey respondents cited subdued demand conditions and a lack of new work as the key drivers for the fall.
Meanwhile, economists at the Construction Products Association have revised downwards the outlook for the industry, warning that output will fall by -2.5% in 2026 as the ongoing impacts of the Middle East conflict take effect.
Private housing is expected to take the biggest hit, with output forecast to drop by -7% this year as higher mortgage rates, falling buyer confidence and worsening viability stifle the sector.
House prices remain stable in April
The latest house price index from mortgage lender Halifax has found that house prices edged down -0.1% in April, following a -0.5% fall in March.
The average property price is now £299,313, with annual growth slowing to 0.4% from 0.8% in March.
Northern Ireland still leads UK annual house price growth, with average prices up 7.6% over the year. Scotland recorded 4.0% growth, with Wales experiencing 0.7% growth.
Property value growth in the north of England continue to outperform the south, with the North East and North West enjoying increases of 4.5% and 3.4% respectively.
By contrast, the South East saw prices fall -2.0% over the year, with London experiencing a -1.4% reduction.
Developer and supply chain updates
Gleeson has warned that remedial works on legacy developments, mainly in Yorkshire, will cost between £5.2m and £7.1m over the next three to four years. The issues relate to road adoption works on previously completed schemes and were disclosed in a trading update covering the 11 weeks to April 24 2026.
The housebuilder will also incur up to £3.1m in restructuring costs under its Project Transform programme, including the merger of its Yorkshire East operations into a single Yorkshire region. Gleeson said the changes would improve efficiency, support higher-return land investment and deliver annual overhead savings of around £0.9m, following a period of commercial and margin pressures within the business.
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L&Q has reported an 11% fall in annual completions to 2,055 homes, the lowest level in more than a decade, as the housing association shifts investment towards improving existing stock. The figure was down from 2,316 the previous year and broadly in line with its revised target of 2,069 homes.
Despite the decline in completions, L&Q more than doubled housing starts from 519 to 1,250, mainly across later phases of existing developments. The group also increased spending on maintaining existing homes from £396m to £424m.
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The Hill Group has secured planning permission for 268 homes across three sites in the south east, including 113 affordable properties, with one development built on land released from the green belt. In Takeley, Essex, the company received consent for a 108-home scheme on a 16-acre site at Parsonage Road.
The development will comprise a mix of two-to-five-bedroom homes, with 40% designated as affordable housing through affordable rent and shared ownership. The scheme replaces a previously approved 66-bedroom care home with 20 residential units and also includes reserved matters approval for a further 88 homes, alongside sustainability measures such as air source heat pumps and EV charging points.
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Research commissioned by Story Homes suggests homebuyers are increasingly prioritising energy efficiency, quality and flexible design over location and lifestyle. In a survey of 2,002 UK adults, 61% said lower energy bills were a major factor in deciding to move, while almost 30% said improved efficiency and reduced running costs would encourage them to relocate.
The findings also point to growing demand for intelligently designed homes, with 66% valuing layout over size and the same proportion favouring adaptable living spaces. More indoor space, higher build quality and low-maintenance homes were also identified as key motivators, leading Story Homes to conclude that most settled homeowners could still be persuaded to move with the right offer.
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