The full cost of a home

Count the whole delivery programme

A home starts with materials and labour. Delivering 500 homes also requires a contractor, professional services, an operating organisation and finance before the first rent arrives. The pilot costing includes these layers.

The proposal’s adopted pilot comprises 500 homes across ten sites. Its funded estimate is £210,925 per home, or approximately £105.5 million across the programme. The £110 million description is a rounded headline for that bond-funded programme. Infrastructure is additional.

The building and its funding have different cost bases

The construction contract includes the builder’s preliminaries, overheads and profit. Adding fees, warranty and environmental compliance gives a building cost of £187,650. Maintenance and management allowances are calculated on that building cost.

Programme costs cover the organisation and arrangements needed to procure, finance and manage delivery. Interest during construction covers the period when bonds incur payments but the homes are not yet producing rent. Those amounts are financed, so they enter the funded cost. They are not physical components requiring maintenance.

The distinction matters. Applying maintenance and management percentages to the entire funded sum would produce a different rent from the one in the pilot model.

Infrastructure adds a separate public contribution

Roads, drainage, utilities and site preparation are necessary delivery costs. The pilot requires Homes England infrastructure grant funding through the National Housing Delivery Fund, with approval and compatibility with the proposed lease structure resolved before construction commitments. The Pilot Scheme page explains that dependency.

Appendix I.6 estimates infrastructure at £18,345 per home for the 500-home case. That adds approximately £9.2 million across the pilot. Adding it to the £105.5 million bond-funded estimate gives an indicative combined total of approximately £114.6 million. This uses the model’s infrastructure allowance; individual site costs vary and the grant is not secured.

The public land contribution sits alongside those cash costs. Peppercorn leasing removes a market land purchase from the bond-funded sum, while the public landowner retains the freehold. The land’s economic value must remain visible when assessing the full public contribution.

The rent follows the funded cost

At a 3% real rate over 35 years, the model’s amortising bond payment is approximately £818 a month per pilot home. Maintenance at 1% of building cost adds about £156 and management at 0.5% adds about £78. Together they produce approximately £1,053 monthly rent.

These are modelled allowances and financing terms. A competitive tender establishes the construction price; confirmed programme costs and funding terms establish the final requirement. The Trust sizes the bond on those costs.

Spreading programme costs explains the increase from the original 100-home pilot. The model reduces that layer from approximately £33,000 per home to £15,000 across 500 homes. The construction contract estimate remains the same in the two cases. The saving comes from the programme’s scale.