New build homes in southern England contain approximately £55,000 in regulatory and planning-related costs that are passed on to buyers through the purchase price, according to analysis by the Centre for Policy Studies.
The thinktank’s research indicates that buyers of new properties are often unaware of these embedded costs, which housebuilders incorporate into pricing to offset expenses related to affordable housing requirements, environmental regulations, and planning obligations.
Cost breakdown
Alan Hibben, an Associate of the Centre for Policy Studies, calculated that an average £450,000 new-build home in southern England includes more than £50,000 in additional costs beyond land, labour, and materials. The breakdown includes £10,000 for biodiversity net gain requirements, £30,000 for planning obligations such as affordable housing contributions or local infrastructure, plus planning fees and costs associated with planning delays.
The findings come as housebuilders face increasing regulatory pressures across the sector.
Policy cost transparency
Hibben stated that the calculations demonstrate “the hidden nature of these costs and the impact of policy decisions on affordability”. He argued that policy objectives are being funded through home buyers rather than general taxation, allowing costs to remain obscured from public debate.
“Successive British governments have buried new taxes, fees and charges inside other systems, especially planning,” Hibben said. “The result is a housing market in which public-policy costs are embedded in the price of a home, while political debate proceeds as if buyers were paying only for land, labour and materials.”
Market implications
The research suggests that regulatory requirements are adding approximately 12% to the cost of new build properties in the region. This comes at a time when affordability remains a significant challenge in the housing market, particularly for first-time buyers who often target new build properties.
The embedded costs identified in the analysis do not appear as separate line items in property transactions, making it difficult for buyers to understand the full breakdown of their purchase price. This lack of transparency contrasts with approaches in other countries, according to the Centre for Policy Studies.
The findings raise questions about the structure of housing policy costs and their impact on property prices, particularly as the government seeks to increase housing supply while maintaining environmental and social policy objectives.
