Social landlords pay more than private sector to build homes, report finds

For example, where there are “significant uncertainties” at the tender stage, contractors may need to include additional costs to reflect those risks.

Other reasons for the disparity include extended approval processes which expose schemes to inflation, and the fact that public sector clients are often looking to achieve broader social, environmental and place-making objectives, which are reflected in higher specifications.

“This combination of factors can contribute to higher quotes received than might be seen under alternative delivery models,” the report said.

The report argues that reforming procurement practices “represents one of the quickest and most practical ways for councils and housing associations to improve delivery and reduce costs within their control”.

One of The Housing Forum’s key recommendations is to standardise procurement processes, including Employers’ Requirements and tender documents, as well as specifications for balcony systems, lift strategies and modern methods of construction components.

The membership network also called on the sector to “shift mindsets from risk transfer to risk management”.

It said: “Early contractor involvement enables risks to be understood and mitigated earlier, rather than simply transferred. 

“Simply seeking to transfer unmeasurable risks onto other parties will inevitably increase the costs they will quote for the work. 

“Instead, feedback loops – where architects and contractors regularly test design decisions against cost – can ensure design ambition remains aligned with budget.”

In order to speed up procurement, the report called for standardisation, parallel approvals and faster governance cycles.

“These reduce the exposure to inflation and remove the need for contractors to build excessive risk allowances into bids. Every month saved in procurement delivers real financial benefit without the risks associated with attempting to compress construction programmes,” the report said.

Alongside these changes within the sector, The Housing Forum also called for consistency in the planning system, procurement reform to reintroduce commercial tension, including two-stage tendering and targeted grant funding to close viability gaps.

The membership body previously estimated that the average construction cost of a standard UK home is £242,000, excluding land. 

Alex Notay, chief executive of The Housing Forum, said: “There is growing concern about the rising cost of housebuilding and the sector’s ability to deliver the homes the UK urgently needs.

“What is less widely recognised is the role procurement plays in driving those costs.

“This new report identifies procurement as one of the most significant – and most controllable – drivers of development costs within the public sector. 

“The good news is that these costs are not inevitable. By standardising processes, improving how risk is managed, and speeding up decision-making, we can reduce costs without compromising on quality, safety or design.”