"Developers are still operating with very little margin for error": HTB comments on latest ONS construction data

16 April 2026

Neil Leitch, Managing Director of Development Finance, Hampshire Trust Bank

“This drop in housebuilding reflects the reality on the ground.

“Developers are still operating with very little margin for error. The challenge is not just planning delays, but planning uncertainty, with even well-prepared, policy-compliant schemes facing less predictable outcomes. That makes it harder to commit capital with confidence.

“Viability remains finely balanced. Build costs are still high, funding conditions are tighter than many expected, and land values have not always adjusted to reflect that shift. Margins are under pressure, reducing flexibility once schemes move into delivery and limiting how many can be taken forward with confidence.

“That is shaping behaviour across the market. Developers are becoming more selective, focusing on schemes that are deliverable in current conditions and managing how and when capital is deployed to avoid overextending in a less predictable environment.

“What is often overlooked is the time lag in development. The challenge is not just what is being delivered today, but what is not coming forward tomorrow, as delays and uncertainty feed directly into weaker output in the years ahead.

“Demand for housing has not gone away, but without greater consistency and confidence in the system, any uplift in output is likely to be uneven rather than sustained.

“In a market like this, the emphasis is on structuring schemes realistically and working with funding partners who can provide consistency, flexibility and direct access to decision-makers through the life of a project.”