THE NEW BUILDING SAFETY LEVY

Following the Grenfell Enquiry, section 58 of the Building Safety Act 2022 set out plans for the construction industry, and developers in particular, to contribute to the cost of Building Safety, ensuring greater accountability across the industry.

The Government had proposed that a Building Safety Levy tax - expected to raise £3.4bn to be spent on building safety, including the removal of existing dangerous cladding -would be imposed on all new developments from Autumn 2025. However, MHCLG has just announced that the Levy will now not be introduced until Autumn 2026.

The levy will be charged on new dwellings and purpose-built student accommodation in England, and must be paid before a completion certificate can be issued. Local Authorities will act as the collecting authority on behalf of Central Government and Registered Building Control Approvers will liaise with them as part of the Building Control process. There are exemptions for affordable housing, developments of fewer than 10 units and other important community facilities.

The Government has also published per square-metre rates applicable in each Local Authority area, based on average house prices, and announced a 50% discount for brownfield sites. These rates are subject to parliamentary agreement of the levy secondary legislation. For example, the per square-metre rates for Kensington and Chelsea will be £100.35 for non-previously developed land and £50.17 for previously developed land, whereas in Stockton-on-Tees the rates will be £14.70 and £7.35 respectively.

Alex Norris Parliamentary Under-Secretary (Housing, Communities and Local Government) announced:

“To give the housing sector more time to adapt, we have determined that the levy regulations will be laid in Parliament later this year, and the levy will now come into effect in Autumn 2026. This will give Local Government, the Building Safety Regulator, and Registered Building Control Approvers a further 12 months to prepare for the levy, and housing developers who will pay the levy more time to factor levy costs into their plans.

Levy rates have been set for each Local Authority area using average house prices for that area. Therefore, the levy rate is highest in those areas with the highest house prices, and lowest in those areas with the lowest house prices. This will help to mitigate the housing supply impact of the levy. A discounted rate of 50% of the standard levy rate has been set for works on previously developed (sometimes known as ‘brownfield’) land, to reflect the higher cost of building on this type of land. Affordable housing and community facilities, and small developments with fewer than ten units are exempt from paying the levy. The levy will be charged per square-metre of floorspace in a chargeable development. The rates are therefore set per square-metre.”

MORE INFO INCLUDING DETAILS OF ALL LEVY RATES:

Building Safety Levy: Technical consultation response - GOV.UK