The Building Safety Levy – Government confirms its plans for residential developments

The government plans to introduce the building safety levy which will be payable by developers and charged on new residential developments. The levy is not yet in force, but the government has confirmed its proposals for the levy in its response to its latest consultation on the levy.

The levy will contribute to the government’s costs of remediating building safety defects. The levy will apply to all residential developments in England unless excluded, regardless of where the developer is based. The government’s overall levy target is estimated to be £3 billion to be raised over 10 years or more.

Consultation response

In response to its latest consultation on the levy (available here) the government has confirmed that it intends to exempt certain residential developments from payment of the levy, including: developments with fewer than 10 units, student accommodation with fewer than 30 bedspaces, affordable housing, non-social homes built by not for profit registered providers, NHS facilities, supported housing, children’s homes, domestic abuse facilities, criminal justice accommodation, armed forces accommodation, care homes and nursing homes.

The response to the consultation also confirms that the government intends that the levy will be payable on build to rent (BTR) and purpose built student accommodation (PBSA) developments. Private retirement housing and conversions to residential use will also be subject to the levy. The levy will be calculated per square metre and will vary by local authority area to account for differences in land value and house prices.

Developers will have to provide details at the building control application stage to allow the levy to be calculated. The levy will be collected by local authorities, and developers will have to pay the levy before the building control completion certificate is issued. A discounted rate will apply to sites that have been previously developed.

Projects which have already submitted a building control application before the launch date (which is still to be confirmed) will not be subject to the levy.

The government has also issued a further consultation on the levy (available here) which will run from 23 January 2024 to 20 February 2024. This seeks views on the design and implementation of the levy, including the methodology for calculating the rates payable, the collection process and further potential exclusions from the levy.

For a more detailed briefing note on the levy, please contact realestatepsls@hsf.com.