More than 100 house builders call on chancellor to reconsider £3.4bn Building Safety Levy

In January, it confirmed a number of exemptions from the levy as part of its response to a consultation on the proposals.

In the letter, the HBF praised the “speed and extent” of the planning reforms put forward by the government, but said a new, “more progressive planning system alone will not deliver the new homes the country so urgently needs”.

The organisation said house builders “recognise the challenging fiscal situation facing the government”.

However, it said “the ability of the industry to invest in increasing the supply of new homes to meet the government’s 1.5 million target is being threatened by the imposition of new taxes, with the government’s forthcoming levy on new homes being the latest in a long line of additional policy costs over several years”.

It said those taxes made development “more challenging and seriously [threatened small and medium-sized enterprises (SMEs)] in particular”.

The HBF said affordable housing providers were also “facing significant challenges” in taking on homes built via Section 106 cross-subsidy.

“Meanwhile, the policy and regulatory costs involved with delivering new homes continues to rise, rendering more of the country unviable for new homes and threatening the government’s very welcome aims to build 1.5 million homes this parliament,” it wrote.

The HBF described the levy as a “nakedly anti-development new tax” on new homes.

“This additional burden will result in many fewer homes, including affordable homes, being built and likely threaten the existence of some hard-pressed SME home builders,” it said.

The HBF said that no formal impact assessment had been conducted to estimate the levy’s effect on housing supply.

It also argued that the need for the levy had “never been demonstrated by the government” and said it was “likely that more than £3bn remains available” in the Building Safety Fund.

The Housing Forum industry body was “pleased” the HBF had raised these concerns and warned that the levy would lead to a fall in social housebuilding.

Shelagh Grant, chief executive of the Housing Forum, said: “Around half of new social rented homes are cross-subsidised from market housing.

“If developers are having to pay a significant new tax on each home they build, affordable housing may become unviable.”

She referred to the forum’s report last year on the cost of housebuilding, which found that the average cost of building a home will surpass £250,000 because of new building safety and environmental requirements.

“It now appears that the cost of the proposed Building Safety Levy may be higher than expected.

“The whole of the housing sector wants to work with government to deliver the 1.5 million homes over this parliament, including much-needed affordable homes. We support the HBF’s calls on the government to reconsider the impact of the levy,” Ms Grant said.

A government spokesperson said the levy would not stop it from reaching its housebuilding target.

They said: “It is right that we protect leaseholders and taxpayers from the costs of fixing unsafe cladding and that developers contribute their fair share.

“The Building Safety Levy was announced by the previous government and has been hard-wired into developer planning. We are working closely with industry on its design and will announce further details shortly.”