Building Safety Levy delayed by a year after house builders’ warning
Housing secretary Angela Rayner has delayed the Building Safety Levy on all new-build residential properties by a year after house builders said it would threaten the government’s target of 1.5 million new homes.
The tax, which aims to raise £3.4bn over a decade to fix building safety defects on mid-rise blocks of flats, will come into force a year later than the proposed date of autumn 2025.
In a consultation response on Monday, the Ministry of Housing, Communities and Local Government (MHCLG) said the delay would give time for councils and the Building Safety Regulator to prepare for the levy and for housing developers to factor the cost into their financial plans.
An MHCLG spokesperson said: “This government is determined to make Britain’s homes safer by making developers pay their fair share to fix unsafe buildings through the Building Safety Levy.
“We have extended the timeline to give developers more time to factor levy costs into their plans while continuing to support them to build safe homes, and at the same time we are continuing to work quickly to fix buildings with unsafe cladding through our Remediation Acceleration Plan.”
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The delay comes after more than 100 house builders warned this month that the levy, originally proposed by the previous Conservative administration to address the post-Grenfell cladding crisis, would result in “many fewer homes being built”.
The levy will be charged on all new homes and purpose-built student accommodation in England which require a building control application.
However, affordable housing, supported housing and non-social homes built by not-for-profit registered providers will be exempt from the levy “so as not to deter their development”.
The charge will depend on the floorspace of the development, with rates per square metre set by local authority area to capture variation in house prices. There will be a 50% discount on the levy for developments on brownfield, ie previously developed, land.
Rates published alongside the levy suggest that it will average around £17 per sq m for brownfield sites to £34 per sq m for greenfield sites. This means the levy will range from £10,000 for a 100 sq m home on a greenfield site in Kensington and Chelsea in London, to £635 for a 100 sq m home on a brownfield site in County Durham.
The tax will be collected by local authorities and returned to the government on a quarterly basis. Non-payment of the levy will mean a building control completion certificate could be withheld or rejected, meaning the developer will struggle to sell or occupy the building upon completion.
House builders welcomed the postponed start of the levy.
Neil Jefferson, chief executive of the Home Builders Federation, said it was “welcome recognition from government that these additional costs will inevitably constrain housing supply, but the news that ministers will still press ahead with this grossly unfair levy rather than obtaining contributions from powerful product manufacturers is a disappointment”.
Ian Fletcher, director of policy for real estate at the British Property Federation, said it was “welcome news” that the government was delaying the start date of the levy, given the “delivery challenges” currently facing the housing sector.
He said: “Developers need to be able to cost the levy into projects that will be going through planning now and can only do so now the government has finally published the levy rates.
“Those bodies responsible for administering and collecting the levy also need to be ready, and given the issues with both the Building Safety Regulator and with local government reorganisation underway in many areas, it is sensible to delay.
“This levy is going to hugely challenge the viability of various forms of housebuilding in places that need it most and the proposed brownfield rates in low house-price areas will have little impact.”
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