Today marks the beginning of the levy’s enforcement, and below we have collected several expert opinions
The Building Safety Levy will charge all new dwellings and purpose-built student accommodations that require a building control application in England, with the amount based on the development’s floorspace in square metres.
If the levy is not paid, then building control completion may be withheld or rejected, meaning projects over 18m, especially, will be halted in their tracks.
The levy has come under fire from several industry voices, being called ‘anti-growth ’, and is considered by many to be nothing more than another drain on developers’ funds and an administrative headache.
The NFB and HBF have called for the levy to be reconsidered
In March last year, the National Federation of Builders (NFB) chief executive, Richard Beresford, said: “The Building Safety Levy is anti-growth, anti-SME policy, which will weaken the housebuilding industry and put the government’s 1.5m home promise in further jeopardy. It rejects the polluter pays principle, targeting innocent housebuilders, and risking unintended consequences, such as shrinking the size of new build homes.”
Read the full NFB response here.
Earlier that same month, the Home Builders Federation (HBF) sent a letter to the then-chancellor of the exchequer, Rachel Reeves, urging for the levy to be suspended and outlining potential impacts on SME homebuilders.
They recommended that the levy be more tailored to developers and developments demonstrating an actual need for the tax, via the government:
- Completing the work promised by officials to be undertaken during 2025, to determine how much funding is required.
- Publishing a robust Impact Assessment to explore how many fewer private and Affordable Homes will be built as a result of the levy.
- Reconsidering the collection and administration of the levy, which is expected to hit SME home builders particularly hard.
- Be braver in tackling the product manufacturers who rebuffed attempts by the previous administration to obtain financial contributions for building safety remediation efforts.
Read more about the letter’s contents here.
It is therefore safe to say that the implementation of the levy is extremely controversial, and many people would see it either changed or removed entirely.
Industry leaders share their thoughts
Dr David Crosthwaite, chief economist at BCIS, said: “The publication of HBF’s latest Housing Pipeline report, alongside confirmation of the government’s new first-time buyer scheme, crystallises where we are on housing.
“Supply in England is dwindling, as multiple datasets continue to show, but the government finally appears to be doing some of what is needed to stimulate delivery.
“Demand-side measures such as Your First Home should give housebuilders greater confidence to invest by supporting affordability and sales.
“Great British Grid could also help accelerate connections for major housing developments currently stalled by limited grid capacity.
“But these measures address only part of the problem.
“Housebuilders still face a cumulative cost burden from levies, higher input costs and policy requirements.
“They are commercial businesses and cannot reasonably be expected to invest in developments that do not generate an adequate return.
“If the government is really serious about delivering 1.5m homes, it needs to create the conditions in which those businesses are willing and able to invest and build.
“This means looking holistically at the costs imposed on development and identifying where adjustments could materially improve viability.
“There is little sense in pursuing an ambitious housing target while simultaneously maintaining barriers that make it harder to achieve.”
Alex Jones, partner in the construction & engineering team at Walker Morris, said: “The Building Safety Levy is intended to support an important objective, ensuring the industry contributes to the cost of making buildings safer. However, its introduction comes at a time when developers are already facing significant pressures on viability from build costs, planning delays and the wider economic environment.
“Additionally, with Housing Secretary Angela Rayner recently admitting the government has a ‘slim chance’ of achieving its 1.5m new homes target, and a crucial Budget on the horizon, there is renewed focus on the implications of the levy.
“While the levy is designed to help fund building safety remediation following the Grenfell tragedy, it will also introduce an additional cost for residential development schemes, raising questions about project viability, land values and the future pipeline of new homes.
“The key question is not simply what developers will pay, but what the wider consequences could be. For some schemes, particularly those with tighter margins, the levy may influence whether projects proceed at all.
“With implementation from 1 October, the industry needs greater clarity on how the regime will operate in practice and how developers can manage its impact while continuing to bring forward much-needed new homes.”
Andrew McEwan, partner, commercial real estate at Forsters commented: “The real test of the Building Safety Levy will be whether it can raise the revenues intended without further constraining an already limited development pipeline. Because the Levy is triggered at building control rather than planning consent, schemes with planning which have not yet applied for building control/Gateway 2 approval may be already progressing on financial assumptions that did not include the Levy and so may now need to revisit viability assessments. Particularly exposed are high-rise, amenity-heavy BTR/PBSA schemes. Likewise, any pre-1 October applications which are refused GW2 approval may find themselves subject to the Levy upon resubmissions. If projects are delayed or no longer stack up financially, this loss of development pipeline will end up reducing the revenues generated by the Levy as well as hampering crucial housing delivery. Over time, the market will need to price the Levy into valuations, but that cannot retrospectively change the economics of sites already acquired.”
Liam Gordon, head of residential at built environment consultancy Hollis, said: “The Building Safety Levy addresses an important funding gap, but it risks creating a further obstacle to housing delivery when many residential developments are already under significant viability pressure.
The government must ensure that the levy supports, rather than undermines, its wider housing ambitions.”
“With charges based on gross internal floor area, the levy captures both private units and communal spaces, increasing the burden on higher-density schemes. Combined with regional pricing variations, it’s essential to monitor the impact on scheme viability, investment decisions and housing delivery.
“However, brownfield developments may benefit from discounts, while affordable and social housing are exempt. This could mean a shift in the types of schemes that come forward in response to the new regime.”
James Morris, construction litigation partner at Mayer Brown, said: “The Building Safety Levy is understandable in principle; few would argue against securing funds to contribute to the remediation of unsafe buildings, albeit there is fervent debate about who should pay. However, the principal concern is whether another cost on residential development comes at the wrong time for an industry already facing significant pressure on multiple fronts. The challenge is whether the Levy will strike the delicate balance between assisting with funding without undermining housing delivery.”
David Hawkins, head of real estate London at Norton Rose Fulbright, said: “With the Building Safety Levy coming into force on 1 October 2026, residential developers need to prepare for a significant new cost and compliance consideration. While the objective of funding the remediation of historic building safety defects is widely understood, the levy will have implications for scheme viability, land acquisition decisions and project financing. Crucially, because unpaid levy liabilities could delay the issue of completion certificates and ultimately the occupation of a development, it needs to be treated both as a critical project delivery issue as well as another development tax.”
Paul Rickard, chief executive, Pocket Living, said: “The introduction of the Building Safety Levy could not have come at a worst time for the housebuilding sector. With the exceptionally high costs of construction and development being viable in a little over a third of the country, this new tax will do little to improve the delivery of new homes. This is a tax payable towards the end of the scheme but before a home is sold and a developer is in receipt of funds – creating another liability with no cash having come in with which to pay it. At the same time, £2.5bn of building safety funds remain unallocated and developers are going insolvent every day. It’s clearly too late to defer the Levy’s introduction, but not too late to introduce an emergency exemption from it, especially for SMEs until this housing delivery crisis is over.”
