- Recent governments have tried to solve Britain’s housing crisis by focusing on our restrictive planning system, but that is only part of the problem
- More than half of the price of a new London home, and two-fifths of a new home outside it, is the product of rules set in Whitehall and City Hall rather than the cost of land, bricks and labour
- Every gain from faster, more certain planning is being cancelled out by the increasing cost of building; costs driven by government policy decisions, ratcheting taxes, mandates and regulations
- Researchers at the Centre for Policy Studies have developed a new model that covers the entire duration of a housing development – from the initial planning through construction and on to sales
- This industry-verified model tracks the minimum viable price of a new home within a housing development and is able to disaggregate the costs that go into building a home. From the land, bricks, financing and labour, through the various taxes, levies, and costly building regulations, the model weighs the various impacts on the final viable sale price
- For the first time, it will be easy to understand the cost of the different impositions that the government mandates on development
- Modelling of a typical brownfield apartment scheme in London indicates that government taxes, obligations and mandated requirements account for 57% of the clearing price of a new flat. For a greenfield housing scheme in the Home Counties the figure is 42%
- For a housing developer to make £1 of profit, they must create £10 of pre-tax, pre-regulation value in London and £8 in the Home Counties.The report suggests four key areas government should focus on it order to make sure house builders can afford to keep building the homes Britain needs
The cost of complying with the mandates, regulations and taxes imposed by national and local governments can be responsible for up to 57% of the cost of a new build home, according to new research published today by the Centre for Policy Studies.
‘Easing the Burdens: How government policy blocks new homes’ by investment professional Edward Donovan and CPS Head of Housing and Infrastructure Ben Hopkinson highlights the failure of recent governments to address the regulations and taxes making house building uneconomical. They have created new modelling – available online – which tracks the minimum viable price, the price which justifies the cost of construction, of a new home within a housing development and is able to disaggregate the costs that go into building it.
From the land, bricks, financing and labour, through the various taxes, levies, and costly building regulations, the model weighs the various impacts on the final viable sale price
The modelling of a typical brownfield apartment scheme in London demonstrates that taxes, obligations and mandated requirements account for 57% of the price a new flat must achieve before anyone will build it.
For a greenfield housing scheme in the Home Counties, the figure is 42%. More than half of the price of a new London home, and two-fifths of a new home outside it, is the product of rules set in Whitehall and City Hall rather than the cost of land, bricks and labour. This makes housing more expensive and less likely to be built. It is obvious these rules are not working for normal people.
For example, when modelling a 100-unit scheme of 700 sq ft two-bed flats built on brownfield in Inner London, each private unit must sell for around £775,000. Without any government intervention the market clearing price would be just £333,000. That means that development would remain viable until the price of new-build homes fell to £333,000 as added supply reduces prices. In effect, currently every private home has to support more than the full cost of building a second private home.
That £442,000 difference is composed of:
- Affordable housing obligations
- Mandated build additions, such as a balcony, dual-aspect, second staircase, and biodiversity net gain requirements
- Corporation tax, stamp duty, and the Residential Property Developer Tax
- Other taxes/levies, including the Community Infrastructure Levy and landfill tax
- Planning and the associated delay
For developments outside London, some requirements do not apply, but the modelling still shows a Chelmsford greenfield development of 100 three-bed houses must sell for around £535,000 to be viable. The cost without burdensome government inventions would be £311,000.
Commenting on the report, Shadow Housing Secretary Katie Lam MP said:
‘In far too many cases, it simply isn’t financially viable to build the homes that we need in the places where people want to live. As the figures in this excellent report show, this isn’t because we’ve forgotten how to build – it’s because of the endless taxes and regulations which have been piled on by the government.
‘We should all want to live in a country where people can afford to move house, whether that’s people getting onto the housing ladder, scaling up, or downsizing later in life. To get there, we need to make building viable again, including by scrapping Stamp Duty, and cutting ideological net zero regulations, which impose expensive add-ons to every new house.’
Report lead-author Edward Donovan said:
‘People build businesses and invest where they can make a return. The greater the return from building homes, the more talent, entrepreneurs and capital enter the sector, and the more homes get built.
‘To increase housing delivery the Government can pay to build homes itself or let the private sector deliver them. The Government is building as many homes as it can afford. If it wants more homes it must make them more attractive to build. With 57% of the price of a new London home set by Government policy, that is in the Government’s gift.’
CPS Head of Housing and Infrastructure and report co-author Ben Hopkinson said:
‘Decisions made in Whitehall and City Hall account for at least two-fifths, and in London more than half of the course of a new build home. Each new tax, levy, mandate or regulation placed on the housebuilding sector pushes home ownership further out of the hands of working people.
‘Recent governments have rightly focused on reforming the planning system, which is necessary in order to get homes built. But without also addressing the regulation and taxation making those homes uneconomical to build, the country will continue to be millions of homes short of where it needs to be.’
ENDS
NOTES TO EDITORS
- Edward Donovan is an investment professional. Ben Hopkinson is Head of Housing and Infrastructure at the Centre for Policy Studies.
- ‘Easing the Burdens: How government policy blocks new homes’ is available under embargo here
- The interactive modelling behind the report is available here
- Journalists and researchers wishing to replicate the modelling in house styles can download the data from the modelling website
- For interview requests, please contact Ben Hopkinson on ben@cps.org.uk or 07539 119163
- The Centre for Policy Studies is one of the oldest and most influential think tanks in Westminster. With a focus on taxation, economic growth, housing, immigration, and energy abundance, its goal is to develop policies that widen enterprise, ownership and opportunity
Date Added: Tuesday 10th November 2026
