The government plans to ramp up housing construction – but the number of homebuilders across the UK is declining, according to a new report
The number of homebuilders across the UK has fallen for the first time in a decade, as climbing mortgage rates and construction costs weighed against demand and imperilled the government’s plans to boost supply.
A Hamptons report showed more than 1,500 homebuilders stopped trading in the year to September, a decline of 1.7%, with 1,904 developers either in administration or in the process of being shuttered.
Labour has vowed to build 1.5 million new homes across the country to alleviate the housing crisis and restore affordability to buyers.
But that pledge could be under threat, with Hamptons suggesting the end of the “Help to Buy” scheme – allowing buyers to purchase interest-free with an initial 5% downpayment – has contributed to a rise in homebuilder shutdowns.
Experts say the UK is currently short millions of homes compared to the average European country, with even the government’s 300,000-a-year target unlikely to make up the deficit.
This week, housing minister Steve Reed and chancellor Rachel Reeves unveiled a new planning bill they said would spur housing and infrastructure construction by slashing red tape, making it more difficult for councils to reject planning permission, and tackling court appeals.
Almost 900 major housing schemes have been blocked during the past year, the bill said. “Under government plans builders will… receive a helping hand to stop planning permissions from being timed out on vital housing projects tied up in the courts,” Reed and Reeves said, “accelerating and unlocking stalled schemes so money can be better spent on getting spades in the ground rather than starting back at square one.”
The Hamptons report, though, suggests there are plenty of other barriers to homebuilding – not least high borrowing and construction costs.
Rising steel, timber, and cement prices have seen homebuilding costs jump by between 15% and 20% since 2020, according to Build Warranty Group chief executive officer Andrew Dyson, with labour costs also on the up.
Homebuyers, meanwhile, are seeing little relief on the mortgage front. Average rates climbed in September for the first time since February, hovering around 5% for two- or five-year fixed-rate mortgages.
