Affordable house builders to be exempt from Building Safety Levy, new plans reveal

In addition, the government has suggested that developments which include a proportion of affordable housing could pay a discounted levy rate on the scheme’s non-affordable component, as well as being exempt from paying it on the affordable properties.

Developers will pay the levy contribution as part of the building control process and will not be able to continue with a project without making the payment.

The government said that if developers do not pay the levy, local authorities would sanction them by halting the scheme, or even issue “punitive fines”.

The levy rate has not been decided, but the government said it will be set by the secretary of state and collected by local authorities.

The government’s proposals include an option to alter levy rates depending on where in the country the building is, with lower rates in areas where land and house prices are less expensive.

The consultation outlined two methods for calculating the levy: either by unit, which the government said would be simpler but might encourage developers to build fewer but larger homes, or by square metre in the same basis that the Community Infrastructure Levy is collected.

In a bid to protect smaller developers, the government has proposed an exemption for small schemes under 10 homes. Conversions will also be omitted, as well as NHS facilities, children’s homes and refuges, including those for victims of domestic abuse.

According to the consultation, the government has not yet decided whether build-to-rent properties, purpose-built student accommodation and housing for older people’s should pay the charge.

It said it would consider the case for each following the consultation process and wider engagement with industry.

Building safety minister Lee Rowley said: “We have been clear that developers must pay to fix building safety issues, and the Building Safety Levy is an important part of making that a reality.

“Today’s consultation will give industry and local authorities an opportunity to work with us going forward. By having these plans in place, we can ensure that all leaseholders are protected, regardless of whether their developer has pledged to remediate or not.”

Earlier this year, Clive Betts, chair of the Levelling Up, Housing and Communities Committee, wrote to the government to say that social housing providers should be exempt from the new levy.

He also asked whether the levy will cover non-cladding as well as cladding issues. This is not explicitly addressed in the consultation, which stated it will be used to “pay for remediation of cladding in buildings over 11m in height”.

The levy will run alongside the developer pledge that was announced earlier this year.

Under the pledge, 49 of the UK’s biggest homebuilders have committed to fixing fire safety defects in buildings taller than 11 metres in which they had a role in developing in the past 30 years. This amounts to a commitment of at least £2bn.

The Building Safety Levy was first announced in February 2021 and plans to extend it to cover all residential buildings were confirmed in April this year.

The consultation runs from now until 7 February 2023 and seeks views on the delivery of the levy, including how it will work, what the rates will be, who must pay, and what sanctions and enforcement will apply.