Building Safety Levy

Following our last Building Safety Levy update in March, the Government laid the draft Building Safety Levy Regulations before Parliament on 10^th July. These Regulations remain subject to Parliamentary approval, but it is expected that the process will be completed by Autumn 2025.

Subject to this, the levy will come into effect on 1^st October 2026 and will apply to anyone submitting an application for building control on, or after that date.

Alongside the Regulations, the Government have now published Guidance which provides further detail on how the levy will be charged. DHA’s Danielle Lawrence and Patrick Good have provided the headline updates as follows.

The Levy Charging Conditions

If submitting an application for building control approval relating to the provision of one or more dwellings or one or more bedspaces of Purpose-Built Student Accommodation (PBSA), the client will need to consider whether the works meet the following levy charging conditions:

The works must constitute, or form part of, a major residential development – 10 or more dwellings (regardless of exempt dwellings) or 30 new bedspaces or more is PBSA.
The works must result in the creation of new residential floorspace.
The client is not an ‘exempt person’ – a non-profit registered housing provider.

The following residential developments are exempt from the levy:

Social housing - including most affordable rent, social rent and intermediate rent, shared ownership, discounted rental properties, first homes, supported housing provided by a local authority, housing association, charity or voluntary organisation.
School accommodation
Accommodation for victims of domestic abuse
Hospitals
Children’s homes and residential family centres
Hotels and hostels
Monasteries, nunneries and similar establishments
Care homes and hospices
Secure residential accommodation such as prisons
Almshouse
Temporary accommodation for homeless people.
Accommodation for the armed forces
Ministry of Defence or Crown properties
Extensions or improvements to existing homes that do not create any new dwellings.

Levy Rates and Calculations

As previously set out, the levy will be charged on a per square metre basis, measured using gross internal areas (GIA). This includes communal space (stairways, lobbies, landings) and other areas which are solely for the use of occupants.

Previously Developed Land

Chargeable developments which are constructed on previously development land (PDL) will be charged at a 50% discounted levy rate.

For the purpose of the levy, PDL is defined as land which either has a building on it or had a building on it at any point on or after 1^st July 1948. However, land is not PDL if:

the land is used for agriculture or forestry, the building that was most recently on the land was used for agriculture or forestry,
the land has been developed for minerals extraction, or
the land has been developed for waste disposal.

In order to qualify for PDL discounted rate, at least 75% of the land within redline boundary of the development (as specified by the planning permission) in which the works are being constructed must meet the definition of PDL.

Levy Rates

Section 2, Chapter 5 of the Guidance provides a table of levy rates by local authority for PDL and Non-PDL land. This has been calculated using data on average house prices in each local authority area.

The highest rate for Non-PDL in the country is the Royal Borough of Kensington and Chelsea, at £100.35 per sqm, while the lowest is Durham, at £12.70 per sqm. Areas such as Ashford (£33.98 per sqm) and Tonbridge & Malling (£42.12 per sqm) fall in the mid-range.

If a building spans more than one local authority area, the levy rate for that building is the levy rate for the local authority in which the greater part of the building is situated.

As previously set out, the rates will not be subject to indexation. If the Government seeks to amend rates at the three-year review point, then Regulations will need to be laid in Parliament.

The Process

Whilst DHA do not assist with building control applications, Section 3 of the Guidance sets out the levy process appropriate to the chosen building control approval route.

When submitting an application for building control approval for applicable development, initial levy information will need to be provided.
When submitting the first commencement notice, further information must be provided to the local authority to allow them to calculate the levy charge, even if the levy conditions are not met.
The collecting authority will issue a ‘levy liability notice’ or notice of no charge within 5 weeks from the date on which the commencement notice is submitted.
The levy can be paid at any point between receiving the ‘levy liability notice’ and notifying the local authority of completion. Payment must be made when works have been completed, and developers will be required to provide a ‘levy liability statement’ when giving notice of completion – the completion certificate cannot be issued without this.
If changes are to be made which require a further application for building control, updated levy information must be provided.

How has this been received?

As expected, reception to the Levy remains mixed.

The industry undoubtedly welcomes the delay in implementation until Autumn 2026, allowing more time for preparation and financial planning. However, overall sentiment remains wary.

In April the Home Builders Federation (HBF) described the Levy as a “nakedly anti-development new tax” and warned that it could add £1,580 to the development cost of each new home, tipping the balance of viability and potentially contributing to the loss of 70,000 affordable homes over ten years.

Vocal opposition also continues from the Build to Rent (BTR) and PBSA sectors as Landlords often develop their own assets, which then generate Return on Investment on a trading basis over many years, rather than through phased unit sales. Increased costs could reduce returns in the short to medium turn, with knock on impacts on finance and investment.

As set out, the Regulations are still subject to Parliamentary approval, but DHA are continuing to monitor this closely and will provide further updates as matters evolve. In the meantime, please contact Danielle Lawrence or Paddy Good if you have any queries.

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Patrick Good