Builders say regulatory burden is driving up home costs
Multifamily developers are hit with rising costs of regulation which are typically almost a third of the overall project price tag.
A report from the National Association of Home Builders says that the average cost of regulation is 32.6% but that it can be as high 42.6%.
Around 7% of the cost is from building code changes over the past 10 years; 5.9% is from development requirements beyond the usual provisions – this could be items such as streets, parking, and landscaping; 4.2% is from non-refundable fees charged when construction starts.
“The home building industry is one of the most highly regulated industries, and the multifamily sector is particularly subject to these obligations,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La.
Further regulations were introduced at the end of 2017, meaning costs are expected to rise further in the near future.
“The current regulatory framework has limited the amount of housing that can be built and increased the cost of what is produced,” said NMHC President Doug Bibby. “At a time when states and localities are struggling to address housing affordability challenges, public and private stakeholders should work together to streamline regulations and take the steps necessary to expand housing in communities across the country.”