Which Classes of Property Will the Building Safety Levy Cover ?

The UK Government's proposed changes to building control regulations for high-rise buildings are stirring concerns among construction industry experts. They are worried about the decision's potential impact on new housing development, particularly in the build-to-rent (BTR) sector. Many industry observers have emphasised the significance of these changes, pointing out their potential repercussions on housing delivery across England.

Under the Building Safety Act 2022, the Government is gearing up to introduce a new building safety levy on various residential developments. These include properties intended for sale as well as those designated for BTR, purpose-built student accommodation (PBSA) and private retirement housing. This broad application of the levy has raised concerns in the industry about its implications for the practicality of such developments.

Viability and the Building Safety Levy

In response to these concerns, the Government has outlined measures to address potential viability issues stemming from the levy. Among these measures are proposals to implement differential levy rates based on local house prices and to offer exemptions for smaller-scale developments. However, the authorities have not answered questions about the practicality and effectiveness of these measures in alleviating the financial burden on developers.

Who will the Building Safety Act Levy be collected by?

Local planning authorities are expected to collect the levy from developers and remit the funds to the Central Government every quarter. Whilst this arrangement aims to ensure adequate funding for building safety remediation works, there are concerns about the administrative burden it may place on already resource-strapped local authorities.

How will the Building Safety Levy be Calculated?

There is cautious optimism amongst the stakeholders about the Government's decision to introduce a floor area-based charge. This shift is a positive step toward ensuring fairness in levy assessments, particularly for developments featuring varying unit sizes. There are apprehensions, however, about the details of the floor space measurement process and the potential inclusion of communal areas in the calculation. In addition to financial considerations, developers also have to deal with the uncertainty surrounding the timing of levy payments. Whilst the Government has indicated a willingness to provide some flexibility in payment schedules, the details of this arrangement remain vague.

Developers eagerly await further clarification to understand the implications for their cash flow and project timelines. For developments undergoing assessment under the building control process, exemptions from the levy may offer some relief. However, experts also caution that careful deliberation is needed to assess the viability of existing projects in light of potential levy charges. Delays in project timelines or unexpected financial burdens can impact developers and investors significantly.

Viability and the Balance Between the Building Safety levy and the shortage of new build housing

The proposed changes to building control regulations represent a significant shift in the landscape of residential development in the UK. It might be aimed at enhancing building safety and addressing housing shortages. However, these changes raise important questions about their impact on development viability and affordability. As stakeholders await further clarity from the government, the industry remains on alert for any updates that may shape the future of housing development in the UK.

For Further Advice

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