Government confirms Building Safety Levy exemptions

In addition to the affordable exemptions, children’s homes, domestic abuse refuges and other types of supported accommodation are also excluded.

In a bid to protect smaller developers, the government has also confirmed an exemption for smaller schemes under 10 homes.

Build-to-rent properties that come under these definitions will still be required to pay the levy, including student accommodation and private retirement homes, due to the profit making nature of the projects. 

Developments that only provide a proportion of affordable housing will not qualify for a discounted levy rate.

This is because the average subsidy required for the construction of an affordable home is likely to be much higher than the average levy rate, and so the government believes that such a discount would not help to incentivise more affordable homes being built.

The 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. They will also be implementing a discounted rate for developments on brownfield sites.

The methodology for the calculation of the Building Safety Levy is yet to be confirmed, however the consultation does state that the levy will be charged on a per square metre basis. Further consultation is currently taking place to determine these details and is due to conclude in February. 

Earlier this month, the UK Treasury outlined plans for devolving powers to Scotland for the creation of its own Building Safety Levy.

The proposals for a Scottish levy would see developers taxed to raise money for the replacement of dangerous cladding.

Tax-raising powers will have to be approved by Westminster before the devolved Scottish government can introduce them. Scottish first minister Humza Yousaf said he would seek the power to introduce such a levy in September 2023.