Why is development more expensive for social landlords?

Procurement costs are significant and, importantly, one of the most controllable drivers of costs to councils and housing associations. Public sector procurement can be slow in any sector, but in housebuilding it suffers particularly acutely from bespoke tendering and a sub-optimal approach to managing risk. 

Part of the problem lies in trying to build to higher specifications than in the private sector – often around sustainability and accessibility. These are laudable aims, but need to be balanced with costs and grant rates – or the end result can be no new housing at all.

“If your design standards and procurement processes are adding so much to the cost that you can’t afford to build, then it may be time to look at what compromises you could make”

For instance, I’ve heard on a few occasions lately of councils moving away from building new homes themselves and instead purchasing finished housing – originally intended for market sale – direct from developers. They do this because it is cheaper than building it themselves.

However, by backing away from development completely, they’re missing the opportunity to commission the type, size or location of housing that really meets local needs, or to do their bit to add to overall housing supply.

Gold-plated design standards can be the enemy of the good in this situation – if your design standards and procurement processes are adding so much to the cost that you can’t afford to build, then it may be time to look at what compromises you could make.

But often it isn’t about making compromises at all, but simply about doing things better. Housing associations and councils procure large-scale housing delivery, so ought to be well positioned to deliver new homes efficiently and at scale.

However, too often, we hear of duplicated documentation, contradictory policy demands and a desire to bespoke every scheme – meaning the economies of scale cannot be realised.

Standardisation is the way forward. This is not about eliminating architectural variety, but more about standardising the processes that go into development – specification levels, employer requirements, balcony systems and tender documents can all be standardised without creating ‘identikit’ homes.

“If those commissioning housing simply seek to pass risks on, the quotes they receive will be higher, reflecting the risks involved”

Another issue where costs can be saved is around how risks are dealt with. Contractors are keen to work with public sector clients early on to design out risk, or agree ways of sharing risks. This enables them to keep prices down. But if those commissioning housing simply seek to pass risks on, the quotes they receive will be higher, reflecting the risks involved.

Early engagement is also key – I was encouraged by an example from two of our Housing Forum members, a construction company and an architects’ firm, who had worked closely together to redesign a housing scheme that looked to be unviable. They’d managed to add in an additional 20 flats, transforming the viability of the project, and allowing 20 extra new homes to be built. We know this kind of collaboration can work. 

But it’s not working everywhere. Our report argues that the combination of higher standards, greater risk transfer, and slow governance means public clients routinely receive higher prices for what is ostensibly the same work. By standardising processes, improving how risk is managed and speeding up decision-making, we can reduce costs without compromising on quality, safety or design. 

Anna Clarke, director of policy and public affairs, The Housing Forum

Anna Clarke is speaking at Housing 2026, during the session ‘Making the case for homes: Building support beyond our sector’ on 24 June at 10.30am, in The Housing Forum Theatre