INSOLVENCY levels in the construction sector mean Labour’s ambitious 1.5m new homes housing target simply cannot be met, experts have warned, which will negatively impact affordability.
One said: “If this continues, fewer homes will be delivered, keeping supply tight and adding further pressure to house prices and rents.” Another added: “Less supply ultimately worsens affordability for everyone.”
The latest insolvency data showed that 3,805 construction companies in England and Wales became insolvent in the 12 months to the end of June 2026.
Construction accounted for 17% of company insolvencies registered by The Insolvency Service, making it the largest single sector in terms of firms going under.
Property industry insiders have previously said the 1.5m target is effectively “dead in the water”.
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, described the insolvency numbers within construction as “a huge red flag” and said they will worsen affordability.
He continued: “Construction making up 17% of all insolvencies directly undermines political promises to build hundreds of thousands of new homes.
“You simply cannot hit ambitious housing targets when the firms built to deliver them are collapsing under thin margins, high material costs, and sticky interest rates.
“For buyers and renters, this squeeze on developers means fewer new completions, directly stifling supply.
“When housing supply drops but demand remains, house prices and rents remain elevated. Less supply ultimately worsens affordability for everyone.”
Mark Alexander, Founder at Norwich-based Property118.com, a community and news hub for landlords, said “over 3,800 construction businesses becoming insolvent in a year hardly suggests an industry enjoying the conditions necessary to deliver the enormous increase in housebuilding politicians continue to promise”.
He added: “Governments tend to discuss housing supply as though granting planning permission causes houses to appear. It doesn’t.”
Tony Sanchez, Founder at Bridging Loan Directory, a trade publisher focused on the property finance sector, said that while insolvency numbers within construction are “significant”, they are just one part of the problem.
He added: “We are seeing developers become more selective as planning delays, build costs and uncertain sales values reduce the margin for error.
“Housing targets depend on viable developers, contractors and supply chains. New housing construction output was 8.2% lower in the second quarter of 2026 than a year earlier.
“Continued pressure on delivery makes housing targets harder to turn into completed homes.”
Jamie Elvin, Director at London-based Strive Mortgages, cut straight to the chase: “You can’t build your way out of a housing crisis if the firms expected to build the homes are going bust.
“With 3,805 construction companies becoming insolvent in just 12 months, housing targets risk becoming little more than numbers on a spreadsheet.
“Rising costs, expensive finance and wafer-thin margins are taking their toll. Every contractor that disappears means lost skills, capacity and competition.
“If this continues, fewer homes will be delivered, keeping supply tight and adding further pressure to house prices and rents.”
Matt Coulson, Founder at Rickmansworth-based Heron Financial, a broker, added: “You can’t hit a homes target while builders are failing in greater numbers than any other sector.
“With 3,805 construction insolvencies in a year and barely a quarter of the 1.5 million target built at 40% through this Parliament, the numbers answer that.
“Two things worry me most. First, it’s the smaller builders squeezed hardest, and SMEs are where many of the industry’s apprentices start before moving up to the big housebuilders. Lose them and you lose the training ground, so the skills shortage already delaying sites only deepens.
“Second, targets treat this as a supply problem alone, when builders are also stalling because people aren’t buying, and they aren’t buying because the monthly cost is beyond them and confidence is low.
“You can’t build 1.5 million homes into a market the buyers can’t follow. Alongside planning reform, we need a government-led way to rebuild confidence and ease that cost. A target doesn’t build a single home. Solvent builders and confident buyers do.”
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said “there’s a stark gap between political housebuilding targets and economic reality”.
He added: “Planning reforms promise 1.5 million new homes this Parliament, but approvals don’t build houses. That makes the government’s own housing goal all but unachievable.”
