The Ministry of Housing, Communities & Local Government (MHCLG) has confirmed 1 October 2026 as the date residential developers will become subject to the additional cost of the Building Safety Levy.
The date was recently published alongside draft regulations and guidance and follows two Government consultations from 2022-2024. With the landscape now clearer, we take a look at why this levy is being introduced, who it affects, and potential exemptions for developers.
What is the Building Safety Levy?
The Building Safety Levy is a tax on residential buildings in England and forms part of a package of measures to fund the remediation of building safety defects. It aims to protect leaseholders from meeting the costs of remedial works. The Government expects to raise around £3.4m in a 10-year period.
Who will be affected?
Developers will be required to pay a levy to the relevant local authority for the area in which the buildings are situated regardless of the building control process used, including where Registered Building Control Approvers (RBCAs) or the Building Safety Regulator is used. A failure to do so will likely result in the local authority withholding the building control completion certificate.
For the levy to apply, the works in the application for building control approval must meet three charging conditions set out in Regulation 15:
1. The works create new residential floorspace
The draft regulations define "residential floorspace" as a) an ordinary residential dwelling; b) purpose-built student accommodation (PBSA); c) communal space for residents. Residential developments that create any one of the above as part of a new building will result in a building control application being chargeable. Additionally, any existing building that creates residential floorspace (either by extension or change of use) will be subject to the levy.
2. The works are part of a major residential development
A major residential development is defined in the regulations as a) at least 10 dwellings, or b) at least 30 bedspaces in PBSA. It is noteworthy that the development of 10 or more new dwellings is classed as major residential development regardless of the number of exempt dwellings which that development includes (although exempt dwellings will not themselves incur a levy charge).
However, the draft regulations are clear that, in the case of the development of new dwellings, if a building contains dwellings immediately before development, then it will only qualify as a major residential development if the post-development building has at least 10 more dwellings than the pre-development building. The same applies in respect of PBSA bedspaces, with the development only being chargeable if at least 30 more bedspaces are provided in the post-development building compared to pre-development.
3. The developer is not an "exempt person"
If the client is an exempt person under Regulation 13 – that is, a non-profit registered provider of social housing (or a wholly owned subsidiary company) – all of their works are exempt from the levy charge, whether or not the intended use of the buildings is otherwise classed as exempt. The rationale for this is because such providers reinvest profits from housing sold or rented on the open market back into their social housing provision.
Exclusions
The guidance states that, as the government does not want to penalise or prevent the development of important community facilities, certain residential developments will be exempt from payment of the levy. These include social housing and supported housing (the qualifying criteria for both of which is set out in Schedule 2) and various other exempt accommodation such as school accommodation, hotels and hostels, care homes, and hospitals (see Schedule 1).
How much will developers pay?
The government has set levy rates for each local authority area, which are listed in Schedule 3. These rates correlate to average house prices in each local authority area and the total amount payable is calculated by multiplying the amount of chargeable accommodation and communal floorspace of the development (in square metres) by the area rate.
Developers will, however, pay a 50% discounted levy rate on chargeable developments which are constructed on brownfield land, which reflects the higher costs that are often associated with developing this type of land.
What are the next steps?
The draft regulations are subject to Parliamentary approval before the levy comes into effect on 1 October 2026. Any developer submitting an application for building control approval relating to the provision of residential dwellings or PBSA bedspaces on or after that date will be liable to pay the levy where the charging conditions are met.
The levy will not apply to applications for dwellings or PBSA bedspaces which were submitted before 1 October 2026. It is worth noting that, if such applications are varied after 1 October 2026, the levy will not apply to such applications.
Keep an eye out
Trowers will be publishing a client alert in the coming weeks providing detailed guidance for a) anyone who is potentially liable to pay the levy or receive an exemption from paying the levy; and b) anyone involved in the building control process, including private sector registered RBCAs.
