Buyers face paying £55,000 in “hidden” costs when they purchase a new-build home, fresh calculations suggest.
Taxes placed on housebuilders to fund initiatives such as affordable housing and net zero policies are not being divulged to homebuyers when they buy properties, according to a policy analyst.
Alan Hibben, who writes for the Centre for Policy Studies, estimates that a typical £450,000 new-build home in southern England has £55,000 of “hidden” costs included in the price.
These include £10,000 for so-called “biodiversity net gain”, a rule in England that requires most builders to make wildlife habitats at least 10pc richer than before construction began.
A further £30,000 is paid by housebuilders for “planning obligations”, which help fund affordable housing and local roads.
The rest is comprised of planning fees and the cost of planning delays.
However, stamp duty, which would be £10,000 for a £450,000 property, is the only tax which buyers would see when they view their invoice.
Mr Hibben said his calculations showed the “hidden nature of these costs and the impact of policy decisions on affordability”.
“Policy objectives for the country as a whole are being put on the backs of home buyers, rather than general taxation, so that the costs can be hidden and builders to blame, rather than politicians,” he said.
He said the UK should copy Canada and show buyers all the taxes they are paying.
“Successive British governments have done the opposite: they have buried new taxes, fees and charges inside other systems, especially planning,” he 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.”
Since the Iran war began, mortgage rates have climbed, prolonging a slowdown in the housing market as prospective buyers hold off on purchasing a home.
On top of weakening demand, housebuilders are also contending with higher build costs, rising taxes, delays from the planning system and strict regulations.
These factors have pushed up the cost of building a new home by £76,000 since 2020, according to the Home Builders Federation.
Housing construction improved slightly in July, according to the latest S&P Global UK construction purchasing managers’ index, but remains firmly in contraction.
Any reading above 50 shows an increase in activity, while anything below shows construction is contracting.
