Building Safety Levy – a new tax for developers

Stephanie Cairns, Associate

The Building Safety Levy is intended to be a new tax on development, that will be applicable when a property developer seeks permission to develop certain residential buildings in England. Originally intended to be effective from Autumn 2025, the tax will now come into force from 1^st October 2026 and will be collected by local authorities alongside their building control function.

The Building Safety Act 2022 contained provisions allowing the Government to introduce this tax, the income of which will contribute towards fixing building safely defects across England.

The tax will be payable where building control approval is applied for in relation to qualifying residential development works, and rates will be set for each individual local authority and weighted according to local house prices. The levy will apply to the development of ten or more privately owned houses and flats, larger purpose-built student accommodation with at least 30 bedspaces, change of use and conversions to residential, and retirement housing. There are exemptions from the levy for certain types of development, for example affordable housing and children’s homes.

Developments will not receive a final building control completion certificate, and cannot therefore be occupied, until the levy is paid. Developers should seek to factor this additional cost into their plans, and should also note that there is no phasing of this tax which will be applicable to all applications submitted on or after 1^st October 2026.

The government has published full guidance on the levy on their website.