Building safety levy

1 Background
2 Call for suspension
3 Planned process of the levy
4 Application
5 Amount
6 Related factsheets
7 Building Safety Act
8 Related articles on Designing Buildings

[edit] Background

The Building Safety Bill 2019-20 was announced in the Queen’s Speech on 19 December 2019 following the Grenfell Tower fire on 14 June 2017. Its purpose was to put in place new and enhanced regulatory regimes for building safety and construction products, and to ensure residents have a stronger voice in the system. Part of the Bill (Clause 57) gave the Secretary of State powers to impose a new Building Safety Levy in England. The Bill was granted Royal Assent on 28 April 2022 and became the Building Safety Act 2022.

The powers to create the new Building Safety Levy were conferred by Section 58 of the Building Safety Act 2022 (in a new section 105C of the Building Act 1984). The details of the levy to be set out in secondary legislation that follows. The levy is intended to contribute towards the government’s costs for remediating historical building safety defects, to be applied to developers, when making an application to the Building Safety Regulator for building control approval, via a “Gateway two” process. It is in addition to a new Residential Property Developer Tax (RPDT). This will tax the profits of larger developers to contribute towards fixing historical fire safety defects, including unsafe cladding.

There are a number of exemptions to the Building Safety Levy which is primarily focussed on private housing development, the exemptions include:

Social and affordable housing.
Developments of fewer than ten units.
Care homes, NHS hospitals, armed forces accommodation, etc.
Supported housing, children's homes, refuges, etc.
For-profit housing built by a not-for-profit registered provider.

[edit] Call for suspension

In March 2025 a significant number if housebuilders and members of the Home Builders Federation (HBF) wrote to the government calling for a more thorough analysis before proceeding with the levy, asking for a robust impact assessment, to consider how the tax will affect the delivery of both private and affordable homes.

The Home Builders Federation (HBF) in the letter and article "highlights how the new tax, expected to raise £3.4 billion, is likely to severely hamper efforts to meet the Government’s target of delivering 1.5 million new homes during this Parliament, especially for small and medium-sized homebuilders (SMEs)."

The letter notes that no formal impact assessment has been conducted to estimate the levy effect on housing supply and that work to more accurately assess how much the funding might realistically be required to collect from industry will only be carried out during 2025.

"HBF draws the Chancellor’s attention to the financial burden the levy will place on developers, especially SMEs already struggling with rising development costs and burgeoning regulatory pressures."

"HBF further points out the inequity of the proposed levy, noting that UK homebuilders have already contributed £6.4 billion towards building safety remediation efforts through a 4% precept on Corporation Tax, along with additional self-remediation commitments from over 50 builders. By contrast, product manufacturers, some of whom were heavily criticised by the Grenfell Tower Inquiry Phase 2 report, have yet to contribute any financial support."

"The letter argues that the need for the new tax has not been clearly demonstrated, especially considering that more than £2.5 billion remains unallocated in the existing £5.1 billion Building Safety Fund, established over four years ago. It calls for a more thorough analysis before proceeding with the levy, calling for the Government to publish a robust impact assessment and consider how the tax will affect the delivery of both private and affordable homes."

[edit] Planned process of the levy

Three process gateways will be introduced, each of which must be approved by the Building Safety Regulator before a project can proceed to the next gateway:

Gateway one – at the planning application stage
Gateway two – before building work starts
Gateway three – when building work is completed

The overall approach in support of the Golden Thread of information proposed as part of the Bill, where building construction information can be more easily tracked and allowing the potential to hold those responsible for building safety more accountable.

[edit] Application

The levy process will apply to residential buildings or care homes over 18m or 7 storeys, in particular 'higher risk buildings' - this will also be subject to exclusions, which are under further discussion. Housing and building safety are devolved matters, as such each of the four nations will be responsible for developing and enforcing their own regulations. The Building Safety Regulator will need to determine building control applications at Gateway 2 within 12 weeks, except where a review or appeal occurs.

[edit] Amount

The government is in the process of making a decision on the eventual levy rate. The levy rate will be set out in regulations and may be varied over time.

The Secretary of State announced the intention to protect small and medium-sized builders, for example through the ability to agree payment schedules if an SME could not pay the levy in full upfront. The finer details of the Levy continue to be under consultation as of April 2022.

For further information visit https://www.gov.uk/government/publications/building-safety-bill-factsheets/building-safety-levy-factsheet

[edit] Related factsheets

A series of factsheets are available through Gov.UK, updated in April 2022 to provide more information about the provisions in the Building Safety Bill and how they will be implemented.