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The long-awaited rates for the building safety levy have finally been confirmed by the government in the Building Safety Levy: Technical consultation response published on 24 March 2025.
The government has also confirmed the levy will come into effect in Autumn 2026, a year later than previously indicated. The government has said this is to give those impacted more time to prepare.
The response, confirms a number of important details in respect of the new levy that will assist the industry and local authorities in preparing for the impact on new developments from Autumn 2026.
How will the levy be calculated?
The levy charge will depend on floorspace, measured using gross internal area, with rates per square metre set for each local authority to reflect the variation in house prices.
The levy will be calculated by multiplying the total floorspace in square metres by the applicable levy rate. This is consistent with the established methodology for the Community Infrastructure Levy calculation at planning stage and appears to have influenced the government’s decision on this aspect. Developments built on previously developed land (PDL) known as ‘brownfield’ will receive a 50% discount to levy rates. This will apply where 75% or more of the land within the planning permission redline boundary falls within the definition of PDL.
Levy rates have been published in the response – these can be accessed here – and range from £100.35 for non PDL in Kensington and Chelsea (£50.17 for PDL) to £12.70 for non-PDL in County Durham (£6.35 for PDL). The rates will be reviewed every three years.
The response confirms that in calculating the floorspace, communal areas will be subject to the levy charge. This is despite the fact that some respondents to the consultation raised concerns that this would have a disproportionate impact on developments with a higher proportion of communal spaces such as flats, build to rent properties and integrated retirement communities, which are not revenue generating and so should not be taken into account.
What developments are in-scope of the levy?
All new dwellings requiring a building control application in England will be subject to the levy. This will include purpose-built student accommodation, the build to rent sector, independent retirement communities, housing with care, and similar, and age-restricted general market housing.
Certain residential buildings which provide ‘important community facilities’ and certain communal accommodation are exempt including 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 and criminal justice accommodation.
In addition, to protect smaller businesses, developments of fewer than 10 units are exempt. The government also intends to include several other exemptions including hotels.
Who will collect the levy?
The response confirms that local authorities will be tasked with collecting the levy on behalf of central government. It also sets out how the government intends the levy collection process to operate.
Information will need to be provided to the local authority or the Building Safety Regulator when an application for building control approval is submitted or when an initial notice is submitted by an RBCA and the client to the local authority. At application/initial notice stage information required will include planning information and the number of dwellings that will be created by the development, or bedspaces in the case of purpose-built student accommodation.
Further information will be required with the first commencement notice submitted in respect of the relevant initial notice or application. This will include information as to whether exemptions to the levy charge apply. If the work is chargeable, then information will also have to be provided as to whether the development is on PDL and the Gross Internal Area of the chargeable floorspace of the development. The response states that supporting evidence will also be required and guidance will be produced to set out what is considered appropriate. Information provided will be subject to spot checks by the local authority.
Failure to provide the information will be a ground for the rejection of the application for building control approval or initial notice.
The collecting authority will then have five weeks following the submission of the levy information accompanying the first commencement notice by the client (or eight weeks if a spot check is taking place) to calculate the levy amount. The collecting authority will issue a notice of levy liability and the levy can be paid following receipt of this notice. The levy should be paid in full prior to the client applying for the first completion or final certificate for the works under the application or notice.
The government does not intend for the payment of the levy to be phased or staged. This may impact larger developments completing in phases where the levy payment for the whole development will be due prior to the client applying for the first completion certificate. Alternatively, a strategy of phased building control applications might be a possibility to mitigate that risk and more closely match the levy to development progress, if that will be permissible in the regulations when they are published.
Failure to pay the levy will result in the withholding of a building control completion certificate, or rejection of a final certificate. In practice this will prevent occupation of the development if those certificates are not received.
Going forwards
The full detail of the levy will be confirmed when the levy regulations are laid in Parliament, which is expected to be later this year. The government has set a revenue target for the levy of £3.4 billion and has kept the scope of the levy wide. However, the implementation of the levy comes at a time when the government has set ambitious housebuilding targets.
The government has stated the levy rates have been “designed to protect the viability of house building across England” but have recognised in the response “that the levy may have a small impact on housing supply, particularly where sites are already close to the viability threshold”.
The design of the levy rate may impact the viability of developments in some areas. For example, having a blanket rate for each local authority does not take into account house price variation within each of these areas. However, it remains to be seen the extent to which the government’s approach to calculating the levy rate will impact projects going forwards.
Another possibility is that land prices may have to fall to make developments viable. If that is the case, then the ultimate funders of a significant proportion of the levy may in fact not be developers but those landowners disposing of land for developments that will be caught by the levy, which in some cases will of course be the public sector.
