First-time buyers are paying for London’s affordable housing
By Charlie Lamdin, founder of BestAgent
The Centre for Policy Studies has published a new report, Easing the Burdens: How Government Policy Blocks Homes. Its headline claim is that taxes, levies and mandates account for 57% of the price of a new London flat and 42% of a new family house in Chelmsford. It’s a serious piece of work and worth reading. I agree with parts of it, but I think its central assumption is wrong.
What the report finds
CPS modelled two 100-home schemes: a brownfield flat scheme in Camden and a greenfield housing scheme in Chelmsford. The London flat has to sell for about £775,000 before it’s worth building, against £333,000 without government costs. The Chelmsford house needs about £535,000, against £311,000. On CPS’s numbers, taxes and regulation take the equivalent of 90% of development profit in London and 88% outside it.
The biggest cost is affordable housing, and that’s the real story
By far the largest item is the affordable housing obligation. It adds £195,000 to every private flat in the inner London scheme, a quarter of the price, and £105,000 to every private Chelmsford house. That doesn’t argue for scrapping social housing. It shows we’ve outsourced it to private developers and loaded the cost onto first-time buyers. If government built council and social homes itself, private buyers wouldn’t be cross-subsidising them. Taxpayers wouldn’t be paying for temporary accommodation that props up rents, either.
A clearing price is not a market price
The figures are “clearing prices”, the price a developer needs before building. That isn’t what buyers pay. New-build prices are set by the second-hand homes around them. Take costs out and the saving tends to go into higher land values and margins rather than lower prices. CPS itself admits prices “will take years to fall this far”.
Why starts have collapsed
Housing starts in England fell from 182,070 in 2022 to 124,830 in 2025, and the report cites 1.4 million homes with permission that haven’t been built. CPS blames tax and regulation, and some of that is fair. But housebuilders build at the pace they can sell without cutting prices. When prices fall, they slow down. That’s the business model, and cheaper permissions alone won’t change it.
Building more won’t bring prices down
The report rests on the idea that more supply will push prices down over time. Prices rose fastest during the last period of rapid building. We don’t have a shortage of homes. We have a shortage of homes people can afford, and that comes down to credit, wages and who owns the stock.
Where CPS is right: simplify
Replacing ten separate taxes and levies with one Floorspace Development Tax, paid on completion when the developer has the money, makes sense. So does ending the 1,250-page planning application for a 14-flat scheme in Walthamstow. In 1937, eight flats needed three pages. Small builders delivered 40% of homes in 1988 and just 10% in 2020, and complexity is part of the reason. A simpler, more certain system is good for small firms, councils and buyers. I’d just be cautious about a claim that it can cut new-home prices by a third and raise more than 50% more tax at the same time.
One for agents: stamp duty
CPS argues that stamp duty on a new home actually falls on the seller, because it reduces what buyers can afford to pay. Agents will recognise that from the second-hand market every day.
The bottom line
Simplifying how we tax and permit development is overdue. But if we want affordable homes, the answer isn’t to make private building more profitable and hope prices follow. Government should build the social homes it needs itself, so first-time buyers aren’t the ones paying for them.
Source: Edward Donovan and Ben Hopkinson, Easing the Burdens: How Government Policy Blocks Homes, Centre for Policy Studies, November 2026.
Charlie
Notes to editors
- Charlie Lamdin is the founder of BestAgent and presenter of Moving Home with Charlie.
- BestAgent is a house moving marketplace that makes it easier, safer and faster to move home without being ripped off or left high and dry.
- Moving Home with Charlie is probably the country’s most watched independent home moving channel.