stories of small builders going out of business and large builders mothballing sites. There is much talk in the media about the hospitality industry being brought to its knees – but little about the building industry. The economy cannot survive without itand the government says it is promoting it, promising to build more new homes … But in our experience this could not be further from the truth.
Historically, when budgeting for a new build, the land would cost one- third, the build would cost one-third and the profit would be approximately one-third. Now, with additional costs and a stagnant housing market, we would be lucky to make any profit at all.
Example one: The build, Gillingham
We purchased a plot of land in Gillingham in April 2024 for around £130k including fees.
The build was a painful experience, with new regulations changing constantly. The cost grew steadily, with materials and labour continually increasing. Regulations now require all new homes to have low-carbon heating systems such as air source heating. This is a huge expense in itself, but the additional cost of fitting and setting up, with plumbers charging £350 to £400 per day, is a significant increase not factored into the original budget. The build eventually cost around £220k, making the total cost for this small four-bedroom house around £350k.
We initially put the house on the market for £395k – now, after a year, we have reduced it to £365k. By the time we eventually sell and pay agents’ fees there will be no profit left. In the meantime there are the ongoing costs of an empty house – utilities, insurance and Council Tax.
As we are a small builder, buying one plot, building on it and then selling the house to fund the next project, our development has been at a standstill – which also then means less work for sub-contractors.
The real kicker – and why I have finally ‘Grumbled’ today – is the new Council Tax ruling. Historically there were subsidies on Council Tax for empty homes and we did receive a small discount for one month. After that we have paid full Council Tax for the past year on a house we are desperately trying to sell to keep our business going, as well as Council Tax on our own home.
We have now received a bill stating that as the property has been empty and unfurnished for over a year, our Council Tax will be doubled to more than £500 a month. We are aware that this rule came in to protect second-home hotspots like Cornwall and the Dorset coast. But this is not our second home. It is our business – and a business from which we will now make no profit, probably a loss with this additional cost.
Example two: The land at Bere Regis
We purchased this corner plot in 2019 with planning permission for a four-bedroom detached house. In 2022 we applied to change the permission to allow two semi-detached, two-bedroom homes, as we felt these were more urgently needed and more suitable for the area.
Planning was granted in principle but, as the land lies within 20 miles of Poole Harbour, development was put on hold until nutrient neutrality could be mitigated. This took around four years of hard work. We have now finally secured mitigation and full planning permission.
The initial cost of the land, plus additional costs over the years, totals around £145,000. Nutrient mitigation is £26,000, payable by 1st April, bringing our total outlay to over £170,000.
As the Gillingham house has not sold, we cannot start this build ourselves. To sell the land we would have to be transparent about further costs. The Community Infrastructure Levy when we first bought the land was around £3.5k. The new fee for 2026 is approximately £28,500 (£210 per square metre).
There is also now an Affordable Housing contribution because we are providing two smaller, more affordable homes rather than one executive four-bedroom property. That additional cost is around £38,000.
With these costs, any possible profit is gone, and no one wants to buy the land and build under these circumstances. Who can blame them?
The land development director at Goadsby recently valued the plot at £45k – a loss to us of over 70%. We are left with land that cannot viably be developed and a house build we cannot profit from. Yet the Government claims to be doing so much to help the building industry and provide millions of new homes …
***The Grumbler – the open opinion column in The BV. It’s a space for anyone to share their thoughts freely. While the editor will need to know the identity of contributors, all pieces will be published anonymously. With just a few basic guidelines to ensure legality, safety and respect, this is an open forum for honest and unfiltered views. Got something you need to get off your chest? Send it to [email protected]. The Grumbler column is here for you: go on, say it. We dare you.***
