The Building Safety Levy: Is the government kicking the can down the road (again)?

On 24 March 2025, the UK Government published a technical response to the consultation for the Building Safety Levy. The levy is, in essence, a tax on housing developers intended to fund the remediation of buildings over 11 metres following the Grenfell tragedy.

The technical response contains our first sight of the levy rates (which differ across local councils to reflect each area’s housing prices) and details that it will now not come into force in autumn 2025 but in autumn 2026. This gives local government, the Building Safety Regulator and building control approvers 18 months to prepare for the levy as well as time for housing developers to factor the cost into their financial planning.

The timing of the government’s announcement is interesting, coming just two weeks after the Home Builders Federation (HBF) wrote an open letter to the chancellor of the exchequer pleading for the following, seemingly sensible, action to be taken before the introduction of the levy:

1. Complete the work promised by government officials to be undertaken during 2025 to determine how much funding is actually required for building safety remediation works. The letter notes that of the government’s £5.1bn Building Safety Fund only £2.4bn had been allocated to remediation projects as of December 2024.
2. Publish a robust impact assessment to explore how many fewer private and affordable homes will be built as a result of the levy, noting that during a recent Public Accounts Committee hearing no impact assessment had yet been conducted for the levy.
3. Reconsider the collection and administration of the levy. The HBF states that the timing and process for collecting the new tax is particularly punitive with payment of the full levy due at the point of completion of the first home on the development.
4. Be braver in tackling the product manufacturers who rebuffed attempts by the previous administration to obtain financial contributions for building safety remediation efforts.

While it makes sense to (finally) publish the levy rates and to allow time for housing developers to factor the costs into their planning, the levy – introduced by the previous government – provides yet another financial and administrative hurdle to the already strained housing market.

Housing developers are already facing huge cost and delay issues caused by the new gateways processes and more stringent administrative burdens than ever before. Compounded by a lack of skilled workforce and further additional costs (including the residential property developer tax and the voluntary remediation pledge) it makes one wonder who would be willing to take on residential schemes in the future.

The cost of the levy will undoubtedly be passed to homebuyers at a time when fewer people than ever before are making it on to the ladder of home ownership. Delaying this by 18 months does nothing to assist first-time buyers, especially in light of the imminent end of the stamp duty holiday. The cynical among us might be minded to reflect on the government’s pledge to build 1.5 million homes during this parliament – yet the considerable delay means that the levy will not hit until two years into that tenure. By kicking the levy can down the road can the government give the housing market a boost; or is it merely introducing further delay and uncertainty? Time will tell.

This article was first published by Construction News in June 2025