Around £76,000 has been added to the cost of building a new home since 2020, according to new research from the Home Builders’ Federation (HBF), raising concerns about the viability of new housing developments in the UK.
The Viability Crunch report examines the cumulative impact of policy, taxation and regulatory pressures on house building. The research highlights a sharp downturn in recent housing delivery, with just 208,000 new homes completed in 2024/25, down 16% from the 2020 peak, driven in large part by worsening development viability. The estimated additional cost per home comprises:
• More than £7,000 in taxes and levies, including £2,000 in Landfill Tax, £2,320 from the forthcoming Building Safety Levy, £2,055 in other taxes and £985 from inflationary increases on existing charges such as Section 106 agreements
• Over £23,000 in regulatory costs, including £7,770 for building regulations, £5,700 for Biodiversity Net Gain (BNG) 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 like nutrient mitigation requirements. The increase represents more than
20% of the average new home value of £365,000 (as of June 2025).
For many years, it has been assumed by policymakers that all rising development costs can be offset by adjustments to land values. However, the scale of cost increases over the past five years has pushed this assumption to its limit. Land values can only fall so far before the supply of land for housing is compromised. With taxes and payments to central Government fixed, developers are increasingly having to try to renegotiate the levels of local affordable housing and Section 106 contributions.
New taxes, levies, and regulations imposed from across Whitehall have created the crisis. The Building Safety Levy, due to come into force in October 2026, will apply to all new homes and aims to raise £3.4 billion, despite the industry already committing £7 billion to building safety, including a 4% Corporation Tax surcharge and £4.1 billion for voluntary remediation. Notably, the majority of housebuilders who will be subject to the new levy will be SMEs who have never constructed buildings taller than the average family home, the HBF says.
Proposed changes to the Landfill Tax will introduce additional cost burdens, further undermining already tight project viability. Although the government chose not to introduce a single rate of Landfill Tax, the tax is still set to rise significantly, by around 500% by the end of this Parliament, adding further pressure.
HBF is calling on the Government to implement a moratorium on new policy costs, taxes, and levies affecting home building and to conduct a comprehensive review of cumulative regulatory impacts. This should include a cancellation of the Building Safety Levy currently scheduled for October 2026, given billions already contributed to building safety and more than £2.5 billion remaining unallocated in the existing Building Safety Fund.
The Government should also suspend further increases to Landfill Tax, which doubled in April 2026 – and is planned to rise every year until 2030. Without urgent intervention, the financial viability of new housing developments will continue to erode, putting the delivery of private and affordable homes across England at serious risk.
Neil Jefferson, Chief Executive at the HBF, 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. Without urgent action the delivery of both private and affordable homes will remain at risk.”