The cost of building a new home has increased by £76,000 since 2020, according to the Home Builders Federation. This figure is attributed to a combination of factors impacting developers.
These factors include an increase in landfill tax and the community infrastructure levy. Building material costs have risen, alongside labour costs, which have been affected by increases in the minimum wage and employer National Insurance contributions. Planning applications have also become more complex and expensive, with significant costs associated with environmental compliance.
For high-rise developments, additional costs stem from the requirement to provide a second staircase and comply with new fire regulations introduced after the Grenfell tragedy. A second staircase can reduce the number of flats on each floor, impacting the Gross Development Value of a project. The cost of providing social housing on some developments, which can be as high as 50%, also reduces profitability.