Tories Claim Plan Could Cut House Prices by £50,000

Conservative shadow chancellor Andrew Griffith has stated that his party, if elected, would aim to reduce the cost of building a new home in England and Wales by £50,000 by scaling back regulations. This figure is based on industry estimates of the costs associated with current regulations and taxes.

However, construction and housing professionals have raised concerns that some of these proposed savings could lead to increased government expenditure on essential public services like schools and roads, as well as on affordable housing initiatives. Additionally, analysts suggest that a reduction in environmental regulations might result in higher household energy bills in the future.

Origin of the £50,000 Figure

The Conservatives argue that several regulations contribute significantly to the expense of constructing and delivering new private homes. These include the Community Infrastructure Levy (CIL), a charge used by local councils to fund infrastructure projects; the Future Homes Standard, which mandates higher energy-efficiency standards for new builds; and Section 106 agreements, which can require developers to include a proportion of social or affordable housing.

The party asserts that by scrapping or reforming these measures, they can reduce the overall cost of new homes. BBC Verify has requested a detailed breakdown of the Conservatives' £50,000 estimate.

Industry Perspectives on Costs

The Home Builders Federation (HBF) has estimated that new regulations, taxes, and inflation since 2020 have added approximately £76,000 to the cost of building an average new home in England and Wales, representing about 20% of its value. Their breakdown includes contributions from Section 106 (£985), the Future Homes Standard (£10,200), and environmental measures like "nutrient neutrality" and "biodiversity net gain" (£12,700).

Excluding the £37,000 increase in material and labor costs, the HBF estimates that regulations and taxes account for roughly £42,000 of the added expense. The Conservative estimate is slightly higher than the HBF's figure for regulations alone, and the party's plan assumes these cost reductions would be passed on to buyers rather than boosting developer profits.

Potential Impact and Concerns

Noble Francis from the Construction Products Association (CPA) noted that regulatory and taxation costs, along with the administrative burden, are significant constraints on residential construction. The UK has struggled to meet its housing targets, with around 203,000 homes built in the year to June, falling short of the goal of 1.5 million over the parliamentary term.

Francis pointed out that both Conservative and Labour governments have introduced additional costs for house building. The Future Homes Standard, for example, was first proposed in 2019 under a Conservative government.

Housing expert Anna Clarke suggested that while reducing construction costs could help build more homes, failing to secure developer contributions for new schools and infrastructure would necessitate alternative funding. Furthermore, some analysts argue that modern environmental building standards, such as the use of heat pumps, are designed to lower household energy bills over the long term. Dr. Richard Lowes of the Regulatory Assistance Project warned that overlooking the energy bill implications could lead to prolonged periods of high costs for households, especially when heat pumps are paired with solar and batteries for optimal efficiency.