The Building Safety Levy: What It Will Cost Developers
The Building Safety Act (2022) introduced the Building Safety Levy which will come into force in October 2026, following a one-year postponement. The Levy aims to raise 3.4 billion over 10 years to fund the remediation of unsafe buildings.
Who the levy applies to:
- New residential developments requiring building control approval, above 10 dwellings.
- Purpose-built student accommodation schemes with 30 or more bedspaces.
- Existing buildings undergoing a change of use to residential.
Importantly, liability is linked to the planning permission rather than building control applications. This is intended to prevent schemes being artificially split into smaller applications to avoid the threshold.
How the levy is calculated:
The levy is charged on a pounds-per-square-metre basis, with rates varying significantly by local authority. For example:
- Leeds: £24.57 per m2
- Westminster: £98.01 per m2
This geographic variation means the impact of the levy is highly uneven, with higher-value areas facing substantially higher absolute costs.
Payment can be made at any point between receipt of the levy liability notice and submission of a compliance declaration to the Registered Building Control Approver. However, the full amount must be paid before any unit can be completed.
What this means in practice:
A 500-home scheme of typical three-bedroom semi-detached houses, with an assumed total floorspace of 47,500m2, would incur a cost of:
- Approximately £1.17 million in Leeds.
- Approximately £4.66 million in Westminster.
Industry opposition and concerns:
There has been various opposition to this levy from Industry Groups such as the Home Builders Federation (HBF) who have publicly criticised the levy describing it as an a unfair additional cost which will constrain the housing supply particularly small and medium enterprise builders.
Additionally a letter sent by more than 100 home builders to the Chancellor in March made clear, this additional burden will result in many fewer homes, including affordable homes, being built.
For more information on the Building Safety Levy you can seek official guidance from the GOV.UK website
