BPF Spotlight Series - Building Safety Levy

For our latest BPF Spotlight, we caught up with our Director of Policy Ian Fletcher to shed light on the Building Safety Levy. In this edition, Ian explains what the levy is, when it will take effect and how the Government plans to use the money raised. Over to you, Ian:

❓What is the Building Safety Levy?

🗣️It’s a charge that residential developers will pay, proposed by the previous Government and in the works for quite some time. Essentially, the Government is covering some building remediation costs, but the levy ensures taxpayers don’t shoulder everything. Developers will pay it when seeking building approval.

As for its impact on development, it’s hard to say since no rates have been published yet. Rates will come later through secondary legislation and will vary by region to account for different viability. What we do know is the Government aims to raise £3bn over 10+ years.

❓When will the levy take effect?

🗣️It’s set to kick off in autumn 2025. Local authorities and the Building Safety Regulator will handle collection, so there’s some time for preparations.

The BPF is also hosting a webinar with MHCLG on 5 February, so the industry can start to prepare. Secure your place here: https://bpf.org.uk/events/building-safety-levy/

❓Will there be any exemptions?

🗣️Yes, there will be, but not on most private sector supply. However, there is a reduced rate. The previous Government floated a 50% reduction for developments on previously developed land, and while the results of that consultation aren’t out yet, a substantial reduction seems likely.

Other exemptions include affordable housing, care homes, supported housing (except private tenure), children’s homes, domestic abuse shelters, armed forces accommodation, criminal justice accommodation, and developments with fewer than 10 units.

❓How will the money be used?

🗣️The levy is part of the Government’s plan to recover some of the billions it has allocated to the Building Safety Funds. Alongside the Residential Property Developer Tax (RPDT), it’s a way to spread the cost.

We managed to exclude most build-to-rent (BtR) and PBSA (Purpose-Built Student Accommodation) from the RPDT, but the levy is broader and less specific.

❓What’s the BPF’s view on the Levy? Are you engaging with the Government?

🗣️We’ve definitely been involved. For example, we pushed for it to be based on floorspace and secured the reduced rate for previously developed land.

That said, there’s disappointment within our sector that PBSA, BtR and communal spaces aren’t exempt. The reality is that more consultees opposed these exemptions than supported them, so the Government went with the numbers.

The levy hits developers at a time of poor viability, which may explain some of the delays, but ultimately the Government has decided to balance its books.