The Building Safety Levy: everything developers need to know
CrowdProperty sets out what SME developers need to know following the Government's response to the Building Safety Levy technical consultation.
The levy, created under the Building Safety Act 2022, is intended to make developers contribute to fixing unsafe buildings, particularly those with cladding problems, after the Grenfell Tower fire. It is due to take effect in autumn 2026, giving developers an 18-month lead-in.
Key features:
• It will apply to new residential buildings in England needing building control approval, including purpose-built student accommodation, and to changes of use that create new homes, such as office-to-flat conversions. • Affordable housing, care homes, NHS facilities and developments of fewer than 10 units are exempt. • The charge will be based on gross internal area, with rates varying by local authority and by whether the land is previously developed. • Councils will collect it through the building control process, with payment due at set stages. • Non-payment will mean the completion or final certificate is withheld, effectively preventing sale or occupation. • Whether it is tax-deductible will depend on individual circumstances.
CrowdProperty advises developers to build the levy into budgets early, especially for schemes above 10 units, revisit viability models, consider smaller or exempt schemes, and stay in touch with local authorities about how they will apply it.
Next steps include secondary legislation setting out how the levy will be assessed, collected and enforced, with draft regulations expected for consultation; work with councils on calculation tools, workflows and appeals; and publication of final local rates, guidance and forms before launch. The Government has also indicated it may review the levy after implementation, including its effect on housing delivery by SMEs.
In the meantime, developers are encouraged to monitor official updates, identify projects likely to be liable, update feasibility work and take financial, legal and tax advice.
