New-build homes in Southern England are burdened with regulatory and planning-related costs amounting to around £55,000, which are ultimately passed on to buyers. This is according to a recent analysis by the Centre for Policy Studies. These amounts are estimated to account for 12% of the property price and significantly impact housing affordability in the region.
The study identifies various factors contributing to these significant additional costs. These include biodiversity requirements, extensive planning regulations, and various fees incurred during the approval and construction process. These costs are deeply embedded in the development process and represent a direct financial burden for consumers wishing to purchase a new home.
Breakdown of cost factors
The cost factors detailed in the report include a range of items that go beyond the pure construction costs. A significant portion is attributable to meeting environmental requirements, particularly in the area of biodiversity. This includes measures to protect and promote biodiversity on development sites, which often requires extensive surveys and structural adaptations.
- —Biodiversity requirements: Measures for the protection and promotion of species diversity.
- —Planning obligations: Commitments imposed by local authorities as part of planning permission.
- —Fees: Administrative costs and charges incurred during the planning and construction process.
Furthermore, planning obligations play a crucial role. These often include the provision of infrastructure, such as roads and utility lines, as well as social contributions, for example, for schools or recreational facilities. These requirements are set by local authorities as part of planning permission and are intended to mitigate the impact of new developments on the existing community. Although these contributions are important for the community, they increase the overall costs for developers and, consequently, for buyers.
The analysis by the Centre for Policy Studies highlights the need to closely examine the cost drivers in the new-build sector. A reduction in these regulatory and planning-related burdens could help lower prices for new-build homes, thus enabling more people to access home ownership in Southern England. This would not only ease pressure on the property markets but also have a broader economic impact.
