Building Safety Levy: Takes effect from 1 October

What is the Building Safety Levy?

 

The BSL is a new charge on major residential development, which is administered through the building-control process, to help fund the remediation of building safety defects in England.

 

How is it measured?

 

The levy is charged per square metre of chargeable floorspace, measured using gross internal areas (GIA).

 

Where does it apply?

 

 

Building control applications and initial notices submitted before 1 October, will not be subject to the levy, subject to the transitional provisions. 

 

 

Which developments are exempt from the levy?

 

Examples of exempt development include:

 

• Developments of fewer than 10 new dwellings or 30 new PBSA bedspaces (including applications for building control approval works for extensions or improvements to homes that do not create new dwellings).
• Social housing.
• Supported housing.
• School accommodation.
• Accommodation for victims of domestic abuse.
• Children’s homes and residential family centres.
• Hotels and hostels.
• Monasteries, nunneries, seminaries, and similar establishments.
• Care homes and hospices.
• Secure residential accommodation such as prisons.
• Alms-houses.
• Temporary accommodation for homeless people,
• Accommodation for the armed forces,
• Ministry of Defence or Crown properties.

 

A comprehensive list is provided on the Government’s website.

 

How much is the Levy?

 

Rates vary depending on the local authority and have been calculated using data on average house prices – for example, the rate for non-PDL in Canterbury is £36.38/m2, whereas London Boroughs such as Kensington & Chelsea are significantly higher at £100.35/m2.

 

The Government has published a full breakdown of the rates for previously developed land (PDL) and non-PDL.

 

Developments that qualify as Previously Developed Land (PDL) are subject to a 50% reduction in the applicable levy rates. To benefit from the reduced rate, at least 75% of the land within the development's red-line boundary (as defined by the planning permission) must meet the definition of PDL.

 

PDL is defined as "land which either has a building on it or had a building on it at any point on or after the 1 July 1948".

 

However, land is not PDL if:

 

• the building on the land is wholly underground
• the building on 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
• the land has been developed for waste disposal by landfill, or
• any operations carried out in, on, over or under the land are not lawful.

 

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.

 

Unlike CIL, 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.

 

What should developers do now?

 

Developers should refer to the Government’s website for detailed guidance on the processes for payment of the BSL.

 

With the Levy coming into effect from 1 October 2026, developers will need to consider early on how this impacts viability, to ensure that schemes remain deliverable whilst meeting other policy requirements.

 

The BSL is an additional development cost that could have a material impact on the viability of major developments, particularly where schemes are already subject to significant policy requirements and infrastructure costs.

 

We are already seeing the BSL being tested at the Local Plan stages, in Local Plan Viability Assessments. The Government’s current approach within the NPPF, places emphasis on viability being addressed through the plan-making process, with the aim of reducing viability testing at the application stage. Developers and landowners should therefore carefully review these documents and their assumptions and engage with local planning authorities where possible.

 

DHA’s Development Viability team can assess the potential impact of the BSL through development appraisals, helping developers and landowners to understand how the Levy may affect development value.

 

Please visit our Development Viability page to learn more about how our team can assist.