Net Zero derailing Labour’s 1.5 million homes pledge, builders warn

The damning claim comes as fresh figures showed property developments have fallen to their lowest level since 2017

Green targets are adding up to £23,000 to the cost of each new home, threatening to derail Labour’s flagship pledge to build 1.5 million new houses, builders warned today.

The damning claim comes as fresh figures showed housing developments have fallen to their lowest level since 2017.

An analysis by the House Builders Federation estimates Net Zero and environmental rules alone are adding almost £23,000 to the cost of every new home, while the total bill from green policies, new regulations, taxes and soaring construction costs has reached £76,000 in just five years. Builders say the cumulative burden is making many developments financially unviable.

Among the biggest extra costs are £10,200 for the Future Homes Standard, which will require greener homes including rooftop solar panels, heat pumps, and tougher energy efficiency standards, £5,700 for Biodiversity Net Gain rules to improve natural habitats, and £7,000 for anti-pollution schemes.

Developers will also be hit by a new Building Safety Levy from October to pay for fixing unsafe buildings after the Grenfell tragedy in 2017. The industry estimates it could add up to £20,000 to every new home.

Developers say those green measures are piling too much cost onto every new home, making many developments commercially impossible.

The warning comes as new analysis published today by Rightmove reveals the number of new-build housing developments coming to market has slumped to its lowest level in eight years, casting fresh doubt over whether Labour can hit its flagship housing target.

Research by the Home Builders Federation also reveals new additions to England's housing stock have fallen from almost 250,000 homes in 2020 to around 208,000 in last year, with annual completions now hovering at around 200,000 - around 100,000 a year short of the pace needed to meet Labour's target. London - which is central to the Government's housebuilding ambitions - saw just 5,547 private homes start in 2025, an 84 per cent fall in a decade.

Steve Turner, spokesman for the Home Builders Federation, said ministers were trying to deliver more homes while simultaneously piling ever more costs onto the industry, adding: "To get to 1.5 million, you need to be building 300,000 homes a year. For the past two years, we've built 200,000 and supply is currently falling... quite clearly the 1.5 is massively off track... you can't just keep layering on all of these costs and expect house builders to be able to deliver."

He warned there had to be trade-offs. "If you want to prioritise Net Zero, then you need to accept you're going to get fewer affordable houses," he said. "But you can't just say we want it all, which is what they're currently trying to do."

Rico Wojtulewicz, Director of Policy and Market Insight at the National Federation of Builders, said successive governments had pursued increasingly ambitious “ideological” environmental and regulatory goals without properly considering their impact on housebuilding.

He warned policymakers were driving the industry towards "whatever standard you fancy" without making difficult decisions about which requirements should take priority.

He said: "These green policies are going to stop the delivery of new homes and force smaller builders out of business. Once you lose them, you don't just lose new homes - you lose the companies training eight in ten construction apprentices. Why, for ideological purposes, push towards whatever standard you fancy without understanding the knock-on impacts? It’s incoherent.”

The Home Builders Federation estimates new environmental rules, together with taxes, levies and soaring construction costs have added up to £76,000 to the cost of building the average new home since 2020.

According to the Federation, material and labour inflation has added around £37,000 to the cost of building the average home over the past five years.

However, it says successive Government policies on top have added so many additional costs many developments that once made financial sense no longer viable.

In its report the Federation cites figures showing that almost 48 per cent of England is now not financially viable for a typical housing development, while a further 16 per cent faces profitability challenges, leaving only around one in three local authority areas where developers can realistically build at a profit.

And despite Labour's efforts to speed up planning approvals, builders say planning reform alone will not solve the problem.

Steve Turner from the Home Builders Federation said: "Planning reform alone is not a miracle cure for the housing crisis. Rising construction costs, additional policy costs, higher taxes, and a growing array of levies have collectively eroded the financial viability of many new developments."