New figures from the Office for National Statistics (ONS) show UK housebuilding fell by 10.3% in July compared with the same month last year, dealing a blow to Labour's ambition to build 1.5million homes by the end of the Parliament. July marks the ninth consecutive month in which housebuilding has fallen against the same month a year earlier, according to experts.
Data published last month showed housebuilding in the second quarter of this year was 8.2% down on the same period in 2025. Overall, UK construction output dropped for the twentieth successive month, according to S&P Global's UK Construction Purchasing Managers' Index (PMI), which tracks changes in total industry activity.
Criticism from Conservative frontbench
Conservative Shadow Housing Secretary Katie Lam told The Express that the figures make grim reading because Labour has increased the cost burden on businesses since taking office in 2024. She said: "Angela Rayner says there's a 'slim chance' she will deliver on her promise to see 1.5million homes built across England by 2029. These figures demonstrate that even this is a gross overestimation."
"Under Labour, house building is going backwards. They've made it too costly to hire and invest; they've hiked taxes and made energy costs soar. It's no wonder house building has fallen off a cliff," she added. "If the Government is serious about building the homes our country needs in the places we need them, they need to work with all parts of the building industry to bring down costs, rather than driving them up."
Industry reaction
Steve Mulholland, CEO of the Construction Plant-hire Association (CPA), a construction trade body representing just under 2,000 firms that supply 85% of the machinery used in British construction, said: "These figures are very disappointing, but sadly they're not surprising."
"Housebuilders and their supply chain contractors across the country are telling us the same thing over and over again: energy costs are crippling, it's too expensive and risky to hire staff, especially young people, and the increased tax burden companies face is putting them off investing," he said.
"Andy Burnham's target of 1.5million homes is ambitious, but housebuilders and supply chain contractors want to deliver the homes our country needs, so we back that ambition. However, the sector is crying out for support to turn the PM's ambition into homes for people to live in, and the latest figures bear that out."
Call for government action
Mr Mulholland called on the Prime Minister to take decisive action to give the sector the confidence to invest in the people and equipment needed to hit the target. He added: "I urge the PM to help the housebuilding sector to give young people the start in life they need, by freezing NICs contributions for under-25s working in construction, and to encourage vital investment by reinstating Business Property Relief."
"Measures like these will give the sector the confidence to invest in the equipment and people required to reverse Britain's housing crisis and deliver the 1.5 million homes this country needs."
Tim Moore, economics director at S&P Global Market Intelligence, said: "UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August."
Former Chancellor Rachel Reeves' changes to Business Property Relief in her 2024 Budget have made construction plant-hire firms, many of which are family-run and supply critical equipment for building homes and infrastructure, liable for huge inheritance tax bills, industry figures say. Business asset value above £2.5million qualifies for only 50% relief, resulting in an effective Inheritance Tax rate of 20% on the excess. Increased employer National Insurance contributions have also added to the cost burden.
A Government spokesperson previously said: "We're building the homes this country needs by investing £39billion in social and affordable housing and tackling planning blockages – with new measures set out just this week to speed up the system. Thanks to our reforms, housing starts are up 15% on last year, and housebuilding will ramp up in the later years of this Parliament as more measures begin to bear fruit."
