Building Safety Levy Latest

The Government have this morning confirmed that following the consultation in 2022 - 2023, they will now be taking forward the policy proposals outlined for the ‘Building Safety Levy’, albeit this will now be delayed until Autumn 2026.

 

The levy will be charged on all new dwellings and purpose-built student accommodation which require a building control application.

 

Certain residential buildings which provide community facilities, and certain types of communal accommodation, will be exempt from the levy charge. These include affordable housing, non-social homes built by 'not-for-profit' Registered Providers, NHS hospitals, care homes, supported housing, children’s homes, domestic abuse shelters, accommodation for armed services personnel, criminal justice accommodation, and developments of fewer than 10 units.

 

The sanction for non-payment of the levy will be the withholding of a building control completion certificate, or rejection of a final certificate.

 

Further details as we understand it, are as follows:

 

• The rates will be set by central government regulations and will not be subject to indexation. If the Government seeks to amend rates at the review point, then regulations will be laid in parliament;
• The levy will be charged on a per square metre basis, against the Gross Internal Area, much like the Community Infrastructure Levy (CIL). Communal areas will be subject to the levy, on the basis that they are for the use or benefit of occupants and will contribute to the value of the building;
• To account for differences in house prices, a differential rate will be set for local authority (LA) areas. The latest update includes a list of the level rate, per LA;
• A 50% rate will be applied on previously developed land – note that where 75% or more of the land within the planning permission falls within the definition of PDL, the entire development will qualify for the discounted rate;
• The levy will be paid prior to applying for first completion or final certificate for the works under the application or notice; and
• The Government is providing upfront funding to LAs, to enable them to prepare for their role as collecting authorities. Once the levy has launched, LAs, in their capacity as collecting authority, will be able to recover administrative expenses from levy revenue.

 

In terms of next steps, Secondary Legislation needs to be debated and approved by the Houses of Parliament before it can be made (signed into law) and brought into effect as law, but the latest update anticipates that the levy will come into effect in Autumn 2026.

 

Yesterdays update was silent on transitional arrangements, but the 2024 consultation response advised that developments will not attract the levy, if they are already at a certain point of the Building Control System on the date the levy becomes operational.

 

Whilst we are pleased to see that allowances have been made for certain developments and previously development land, the introduction of this Levy will place further burden on developers alongside existing planning obligations and will inevitably impact the delivery of homes in the short to medium term, at the very least.

 

DHA are monitoring this closely and will provide a further update as this progresses. In the meantime, if you have any queries, please feel free to contact DHA's Viability Lead, Danielle Lawrence.