The Intermediary – December 2025 - Flipbook - Page 35
SPECIALIST FINANCE
Opinion
Death by a
thousand taxes
T
he Budget has layered
fresh pressures onto a
housebuilding industry
already buckling under
tight margins and
supply bolenecks
– throwing grit into the delicate
mechanics. The 4.1% rise in the
National Living Wage follows a 6.7%
jump to £12.21 in April this year – and
echoes the near-10% surge to £11.44
in April 2024. While these uplis
undoubtedly support low earners,
they strike at the heart of construction
labour costs, which can consume up to
55% of project budgets.
So, this wasn’t a footnote to the
Budget for housebuilders. This was
a compounding blow that risks
stalling the pipeline of new homes
the nation craves. The increase in
the National Minimum Wage is
set to benefit 2.7 million workers.
But it will cost the wider economy
billions, and construction will bear
a disproportionate share. In a field
reliant on semi-skilled trades, these
costs ripple directly into viability
assessments.
Given that the cost of building a
basic three-bedroom house was an
already strained £284,000, Rachel
Reeves has added thousands of pounds
onto the cost of building a home.
This is not a standalone hit. The
industry is still reeling from last
year’s 6.7% rise. Small to medium
enterprises (SMEs) are already
navigating National Insurance hikes.
The housebuilding sector is being
stifled by relentless incremental
pressure. While these are modest in
isolation, they are fatal in aggregate.
You only have to look at the hospitality
sector to see how it will play out.
No wonder Richard Beresford,
the chief executive of the National
Federation of Builders (NFB), said:
“Death by a thousand taxes has already
killed off many businesses, with
insolvency rates still high within the
construction industry.”
This makes building new homes
less aractive. Profit buffers, honed
thin by post-Grenfell regulations and
net-zero mandates, offer lile room
for manoeuvre, and developers are
already being squeezed by planning
delays and material price volatility.
It is not as if housebuilding targets
were being met. Labour’s flagship 1.5
million homes pledge means building
300,000 a year. There were only
208,600 completions in England for
2024/25, the lowest since 2013 and
down 6% year-on-year.
Are there answers?
Modular construction promises a
revolution in UK housebuilding, with
factories churning out prefabricated
home sections much faster than
traditional methods, with lower
waste, beer quality control, and
significant cost savings. But I feel as
though we have all been banging that
RICHARD SEXTON
is commercial director
at Houzecheck
drum for years. According to
Mordor Intelligence, MMC still only
accounted for 16% of new-builds in
2023 – although up from 9% in 2017 –
making it still far from mainstream.
Maybe this will drive demand a lile
further? In Sweden, as many as 84%
of detached homes have prefabricated
elements. I’m not sure I hold out much
hope. While the surveying market
is embracing proptech, the housing
market seems less keen to modernise.
While changes to the minimum
wage might signal a war on poverty,
the construction sector is caught in
Rachel Reeves’ crossfire – and our
housing stock could well turn out to be
economic collateral damage. ●
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December 2025 | The Intermediary
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