Building a new home is now £76,000 more expensive than it was six years ago, HBF says

The Home Builders Federation (HBF) has published research which says the cost of building a new home has risen £76,000 since 2020, with the biggest single contribution coming from material and labour inflation.

A new report from the body, which represents the housebuilding industry, says the additional cost is impacting the viability of new housing development, making it uneconomic for companies to build new homes.

The report, called ‘The Viability Crunch’, highlights the 16% drop in completions in 2024/25 compared with the 2020 peak.

While its report found that increases in material and labour costs due to high levels of inflation were the biggest individual contributor to rising costs, accounting for £37,000 of the increase, the remaining £39,000 was driven by tax and policy changes introduced by the government.

This included more than £23,000 in regulatory costs per home, with £7,770 of this relating to building regulation, £5,700 to biodiversity net gain and £10,200 to the future homes standard.

Taxes and levies accounted for £7,000 of the increased cost, including £2,000 for the landfill tax, £2,320 for the building safety levy, £2,055 in other taxes, and £985 from inflationary increases on existing charges such as section 106.

A further £7,000 related to additional site-specific costs like nutrient mitigation requirements.

According to its analysis, the increase in cost since 2020 represents more than 20% of the cost of a new home as of June 2025.

The HBF argues that policymakers have assumed that rising development costs would ultimately be borne by landowners – an assumption it said was being pushed to its limits.

The HBF is calling on the government to introduce a moratorium on new policy costs and conduct a review of current ones. It said this should include a cancellation of the Building Safety Levy and proposed increases to Landfill Tax, which is set to rise every year to 2030.

“If government wants the private sector to deliver, it must create the right conditions for it to do so,” said Neil Jefferson, chief executive at the Home Builders Federation.

“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.

“Increased taxes and policy costs, alongside suppressed demand due to a lack of affordable mortgage lending and no Government support for buyers, are preventing builders increasing housing supply and putting the Government’s housing ambitions increasingly out of reach.”