Prepare for the building safety levy

As we explored in a previous briefing, the levy will apply to all new residential developments (including mixed-use buildings) in England in respect of which a building control application is submitted on or after 1 October 2026. This includes privately-owned houses and flats; BTR blocks, PBSA and retirement accommodation, and conversions to residential use.  Developments of 10 units or fewer, or PBSA with fewer than 30 bedspaces, are outside scope (as they do not qualify as major residential developments); as are affordable housing, and community facilities such as hospitals, care homes, schools and hotels (as exempt buildings).

The amount charged can be calculated by multiplying the chargeable floorspace and the location-specific rates set out in Schedule 3 of the Building Safety Levy (England) Regulations 2025. Brownfield schemes may qualify for a 50% discount, as long as 75% of the relevant site consists of "previously developed land". There are new regulations which amend how previously developed land is calculated (see The Building Safety Levy (Amendment) (England) Regulations 2026), clarifying how paved areas, underground structures, and plant and machinery are considered.

The person liable to pay the charge is the client named in the relevant building control application.  This will usually be the developer but could instead be the landowner.

The levy becomes payable when a levy liability notice (or a revision to a levy liability notice) is given to the payee.  Failure to pay can delay final certification.

Landowners who are selling land to developers need to check that the terms of any current transactions make it clear which party is responsible for paying the levy.  In future deals, they may find that the amount of levy payable will be deducted from the sum that the developer is prepared to pay for the land.

Developers should look at their portfolio of existing development agreements, options, sale and purchase agreements and promotion agreements to see which of them fall within scope.  Broadly, this will be those agreements in respect of which building control applications will be made on or after 1 October 2026 which do not fit within any of the exemptions.  For any that come within the regime, developers will need to check that the agreements spell out which party must pay the tax.  They will also need to check their appraisals and funding assumptions and gather evidence for any brownfield discount claim. Discount claims will need to be re-assessed once the new regulations come into force.

REUK is calling for the Government to scrap or delay the introduction of the levy, on the basis that housing viability is already strained due to the extent and pace of regulatory changes, tax increases and increasing construction costs. Angela Rayner has admitted that the Government's target of building 1,500 new homes during this Parliament is unlikely to be met. However, there is no sign of any official change of heart over the imposition of this new levy.