Housebuilders urge Labour to cut red tape and rule out tax rises as housing plans falter

Building industry leaders have urged the Labour government to abandon plans for further tax increases on housebuilding and to slash regulation after the party's housing plans were severely undermined by political turmoil and rising mortgage costs.

The call came as Housing Secretary Angela Rayner quit over questions about her own property dealings and ministers faced fresh warnings that they will fall short of a manifesto pledge to deliver 1.5 million new homes during this parliament. At the same time, two major mortgage lenders, Nationwide and Virgin Money, raised mortgage rates, prompting concern that higher government borrowing costs on global bond markets are feeding through into the housing market.

Industry representatives said the combined effect of political uncertainty, tighter financing conditions and regulatory burdens is chilling both demand and supply. Hina Bhudia, a partner at mortgage and insurance advisers Knight Frank Finance, said Nationwide's decision to reprice was pivotal. "Nationwide's decision marks a turning point — because they are typically the cheapest on the High Street, and when they reprice, others tend to follow," she said.

Berkeley Group, one of the UK's largest housebuilders, urged Chancellor Rachel Reeves to use the upcoming Budget to commit explicitly to no further taxes on the housing sector. The firm warned of "a confluence of well-documented regulatory, economic and market factors" that are holding back development and said: "The focus must be on de-regulation and not increasing taxation."

Company warnings underline strains across the housing pipeline. Developers have cited rising costs related to planning and building standards, shortages in labour and materials, and higher borrowing costs as barriers to delivering more homes. Ministers have previously set ambitious targets to boost supply, but industry sources and analysts say the combined pressures almost certainly mean the government will miss the 1.5 million homes goal.

Mortgage rate moves this week have added to market unease. Lenders typically adjust retail pricing in response to changes in gilt yields and the wholesale cost of funds; a spike in government borrowing costs on global bond markets can quickly push up mortgage rates for consumers. Analysts say higher mortgage rates reduce affordability and can slow buyer activity, which in turn hits developers that rely on steady demand to sell new homes.

Labour ministers have defended their wider housing agenda but face mounting pressure from the sector to prioritise measures that lower the cost of delivering homes. Housebuilders and advisers have called repeatedly for streamlined planning processes, clearer timelines on approvals and targeted measures to ease capital and financing constraints for large-scale developments.

The combination of political upheaval at the ministry level, tighter mortgage pricing and persistent regulatory challenges has sharpened industry appeals for immediate policy action. Builders say that without deregulatory steps and assurances on the tax stance, private-sector investment in new housing will remain constrained, further diminishing prospects of meeting the government’s housing delivery targets.

Ministers have not yet published a detailed response to the latest industry statements. The Budget and subsequent fiscal guidance will be watched closely by housebuilders, lenders and investors for clues about the government's next steps on taxation, spending and attempts to revive stalled development projects.