When a household pays £450,000 for a new home in England, a striking share of that price is not paying for bricks, mortar or even land. It is paying for planning obligations, biodiversity rules, regulatory overhead and delay-driven finance costs – none of which is itemised for the family that ultimately bears the cost. Stamp duty adds to the burden, although that at least is visible on the completion statement; the rest is simply buried in the price. This opacity is not accidental. It is a core feature of modern British government, where disguising the true tax take has become a political art form.
The result is a system in which the buyer of a modest new home is quietly funding affordable housing, local roads, biodiversity credits, planning bureaucracy and the cost of navigating a slow, discretionary planning system. Yet the buyer is never shown the bill. Britain needs legislated transparency for every new-build sale, so households can finally see where their money is going.
A lesson from Canada
Canada introduced a VAT-style tax decades ago – the Goods and Services Tax, later harmonised into the HST. It was not popular, but it was economically sound. One of the innovations of my colleague, the late Finance Minister Michael Wilson, was to require that the tax be clearly displayed on every invoice. In a 2010 CBC retrospective on the GST’s 20th anniversary, he said he wanted the tax ‘in your face every time you bought something’.
Britain needs legislated transparency for every new-build sale, so households can finally see where their money is going
Successive Canadian governments have kept that rule – at least with respect to GST. Successive British governments have done the opposite: they have buried new taxes, fees and charges inside other systems, especially planning. 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.
The anatomy of a £450,000 new-build
To illustrate the scale of hidden taxation, consider a typical £450,000 new-build home in southern England in 2026. On reasonable assumptions, roughly £65,500 of the buyer’s full outlay (including stamp duty) can be attributed to planning obligations, biodiversity requirements, regulatory overhead, planning-induced finance costs and transaction tax.
Here is the breakdown:
- Base construction: £189,000
(90 m² at about £2,100/m², within 2025–26 new-build cost ranges reported by Urbanist Architecture, Checkatrade and similar guides.) - Professional and technical fees: £25,000
(Architecture, engineering, planning consultants and surveys, consistent with current planning and build-cost guidance.) - Land share: £60,000
(A mid-range residual, in line with planning-gain and land-value analysis.) - Finance and overhead including delay: £35,000
(Reflecting multi-year programmes and documented planning-delay carry costs.) - Planning obligations (s106/CIL): £30,000
- Biodiversity Net Gain: £10,000
- Statutory/local development fees: £1,500
- Other regulatory administration: £1,500
- Developer margin: £28,000
- Sale price before SDLT: £450,000
- SDLT: £10,000
- Full buyer outlay: £460,000
This is a worked example based on established sources: UK build-cost guides, post-2023 planning-fee regulations, Biodiversity Net Gain rules and pricing bands, planning-gain literature and published evidence on planning delay and finance costs. It demonstrates that a substantial part of the price of a new home now reflects public-policy objectives and the cost of navigating a slow, discretionary planning system, rather than the physical act of building a house.
1. Planning obligations
Local authorities use section 106 agreements and the Community Infrastructure Levy to require contributions towards affordable housing, education, highways, open space and other infrastructure. Because planning permission creates land value, the principle of ‘planning gain’ says that the state may capture some of that uplift.
In practice, the buyer of a private home pays – indirectly – for things that politicians frame as contributions from ‘developers’. The Home Builders Federation, in a 2026 briefing on taxes and policy costs, recently argued that new taxes and policy costs add about £76,000 to the cost of building a new home. That is an industry estimate and should be treated critically, but it demonstrates that the sector itself now quantifies policy burdens on a per-home basis.
For this example, £30,000 per unit is used as a blended share of affordable-housing cross-subsidy, cash or in-kind contributions to local infrastructure, and related planning-gain items. The exact number varies widely, but planning-gain literature and government land-value papers support the proposition that these sums routinely reach tens of thousands per private unit.
These costs are disguised taxation. The buyer is being forced to invest in public goods so the reported tax rate can be held down and political objectives can be financed without transparent taxation.
2. Biodiversity Net Gain
Since 2024, England has required most new developments to deliver at least a 10% net gain in biodiversity (BNG) under the Environment Act and associated guidance. Developers can meet the BNG requirement on-site, off-site or by purchasing biodiversity credits. All options carry cost.
That cost may involve setting land aside for habitat, redesigning layouts, paying ecologists or purchasing off-site units from landowners. Guidance for housing associations from the National Housing Federation has already noted that landowners and social landlords can generate income by selling BNG units off unused land – another way of saying that home buyers are now funding a new ecological market.
In a 2023 article on BNG, I argued that the incidence of this hidden tax falls entirely on the home buyer and benefits a wide range of intermediaries and rent-seekers. If this is truly a public good – which is debatable – government should fund it through general taxation, not through the price of new homes.
In the worked example, BNG is simplified to £10,000 per home. Some sites will be lower; others materially higher.
3. Planning fees
Planning application fees for major schemes rose sharply in late 2023, with a 35% increase for major development and annual inflation-linked uplifts thereafter under the revised Town and Country Planning (Fees) Regulations. A 100-unit scheme can easily face a planning application fee of around £40,000 before the wider process even begins, as shown in worked examples by Montagu Evans.
Many authorities also charge for pre-application advice, planning performance agreements, design review, condition discharge and other case-management steps, as set out in DLUHC planning-related fee guidance and local fee schedules.
Spread across a 100-unit scheme, this stack reasonably represents about £1,500 per home. Small relative to the selling price, but part of a wider pattern in which the state charges for access to the permissioning system at every stage.
4. Professional and technical fees
A further layer consists of professional and technical fees generated by the regulatory process: planning consultants, transport consultants, ecology surveys, tree reports, heritage reports, noise assessments, air-quality work, viability reviews and repeated design iterations.
Some of these costs are necessary in any civilised system. But the UK’s discretionary, document-heavy planning system adds a substantial burden. PlanningPerm, Mayfair Studio and other practitioner guides list architect fees, planning consultant fees, drawings, surveys and numerous hidden planning-related costs as standard features of bringing even a modest project forward.
In this example, total professional and technical fees are put at £25,000 per unit, with perhaps half treated as intrinsically necessary and half as substantially the product of the planning framework.
5. The cost of time
The planning system extracts time – and time must be financed. The House Builders Federation has said that planning delays are one of the greatest obstacles facing SME builders, and its recent reports show that only a minority of major developments meet official decision deadlines.
A DLUHC-commissioned report on delays and barriers in the planning applications process documents prolonged timelines, repeated information requests and validation issues that stretch determination periods far beyond statutory expectations. Development Finance Today, reporting on lender experience, noted that the average time to determine a major residential outline application had risen to about 783 days – more than two years.
Every month between land acquisition and start on site carries financing implications: debt or equity carry, consultant fees, management time, stale tenders and inflation erosion. Academic work by the London School of Economics on planning risk and development explicitly concluded that obtaining planning consent constitutes a significant risk in housing development and increases both the required rate of return and the cost of finance.
That is why the worked example raises finance and overhead to £35,000 per unit.
6. Profit: not the whole story
Profit margins in UK development are real, but part of what is labelled ‘profit’ is compensation for land risk, planning risk, market risk and programme delay. Sector analysis and viability debates often refer to target returns of around 15–20% of Gross Development Value for lower-risk schemes, with higher numbers for complex projects, based on work by RICS, the Letwin Review and others. Those returns are partly produced by the risk profile of the British planning system.
The worked example cuts the developer margin back to £28,000 per home to avoid pretending that the entire wedge between build cost and sale price is a windfall. Much of that wedge is compensation for delay, uncertainty and policy-imposed cost.
7. Stamp Duty Land Tax
Stamp Duty Land Tax is at least visible. HMRC’s current residential bands for England and Northern Ireland charge 0% up to £250,000 and 5% on the slice between £250,001 and £925,000. On a £450,000 home, that means SDLT of £10,000.
The point is not that SDLT is hidden. It is that the buyer pays both a visible transaction tax and an embedded policy bill within the price of the home.
A simple reform: show buyers the bill
If the British state wishes to fund affordable housing, local roads, habitat creation and planning administration through new development, it can do so. But it should do so honestly. A standardised ‘new home cost statement’ attached to every new-build sale would show the estimated per-home incidence of planning obligations, biodiversity obligations, major planning and regulatory fees and SDLT.
It would not solve the underlying cost problem. But it would end the sleight of hand in which political choices are loaded into the price of housing while public debate continues as if buyers were paying only for land, labour and materials.
The potential owner of a £450,000 house in southern England is not rich. That family is struggling too – and deserves to see the bill for the public-policy costs they are being forced to pay.
Alan Hibben is the co-author of ‘Suffocated by Tribunals’ and a former Managing Director in the Mergers and Acquisitions Group of RBC Capital Markets and Head, Strategy & Development at RBC Financial Group
(UKR)