The Building Safety Levy – a further cost on residential property…
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On 1 October 2026 the Building Safety Levy comes into force but what is it and what is it intended to do? Introduced by The Building Safety Levy (England) Regulations 2025 the levy will be payable on relevant residential and purpose-built student accommodation schemes where the developer submits a building control application after 1 October 2026.
The levy is intended to raise £3billion over the next ten years which has been earmarked to fund much needed existing remedial building safety works. The levy is calculated by reference to the gross internal area of new floor space provided by the development. The actual figure payable is calculated using this figure and multiplying it by a rate applicable in the local authority in which the development is located. The rates have been calculated using average house prices in the area, for example the applicable area rate in the Royal Borough of Kensington and Chelsea is £100.35 whilst in Leicester it is £27.29. The rate is applied with a 50% discount where at least 75% of the land being developed has previously been developed. The levy is payable to the local authority who have the power to withhold the building control completion certificate if the levy remains unpaid.
The levy is payable on purpose-built student accommodation schemes which provide at least 30 new bedspaces and on residential developments which provide at least 10 new dwellings (be they houses or flats). The levy is therefore not constrained to just new build blocks of flats and will hit a wider range of residential developments. There are some exemptions from the levy including schemes for social or supported housing or hotels.
The current Government delayed the introduction of the levy by 12 months moving it from Autumn 2025 to 1 October 2026 with the intention of providing local authorities time to factor in the additional work required and for developers to allow for the additional costs in their budgets. There have been calls in recent months for a further delay to be introduced as this additional cost could prove to have damaging effects on an already troubled residential development market. Indeed, the levy, which comes in addition to the community infrastructure levy, the residential property developer tax, a costly planning system and rising construction costs, could make more schemes unviable and it is hard to see how it might ease the housing crisis or assist with the current Government’s commitment to deliver 1.5million new homes during its term in power.
