The Building Safety Levy (England) Regulations 2025 are due to come into force on 1 October 2026. The levy is a key part of the Government’s building safety reforms and is intended to generate funding to help remediate unsafe residential buildings following the Grenfell Tower tragedy.
For developers, investors and housebuilders, the levy introduces a new cost that will need to be carefully factored into project viability, land acquisition strategies and development appraisals.
What is the Building Safety Levy?
The Building Safety Levy is a tax, which developers will pay on building control applications for new residential development from 1 October 2026, subject to certain exemptions. The levy will fund building remediations like cladding, including social housing where responsible developers cannot be identified or held liable.
The levy is enabled by powers under the Building Safety Act 2022 and implemented through the Building Safety Levy (England) Regulations 2025. The regulations provide the detailed framework for how the levy is calculated, collected and enforced.
When Does It Apply?
The regulations come into force on 1 October 2026 and generally apply to building control applications submitted on or after that date. Consequently, developments with building control applications submitted before that date will generally fall outside the scope of the levy, even where construction continues after 1 October 2026.
This means developers currently progressing schemes should carefully consider the timing of their building control submissions, particularly where projects are close to commencement.
Which Developments Are Affected?
The levy applies to major residential developments, defined as 10 or more dwellings, or 30 bedspaces in purpose-built student accommodation. Additions to existing buildings are only caught where they increase dwellings or bedspaces beyond these thresholds.
The levy is triggered by building control applications submitted on or after 1 October 2026, including full plans, initial notices, and higher-risk building applications. Variations linked to earlier applications remain exempt.
The regulations are drafted to prevent developers avoiding liability by artificially spitting larger developments into smaller phases. Whether the levy applies is assessed by reference to the overall development authorised by the relevant planning permission rather than individual building control submissions.
Are Any Developments Exempt?
Yes. The regulations provide a number of exemptions including schools, hospitals, care homes, hostels and temporary accommodation for homeless persons as are applications submitted by non-profit social housing providers. Detailed eligibility requirements apply and developers seeking to rely on an exemption will need to ensure that the relevant evidence is provided as part of the building control process.
How Will the Levy Be Calculated?
Levy rates vary geographically and are linked to local authority areas. The Government has also introduced different rates for previously developed land in certain circumstances. Developers will therefore need to examine the applicable area rate for each project location when assessing development costs.
The amount payable will depend on the chargeable floorspace which is the new residential floorspace that will be created, which includes chargeable residential floorspace and chargeable communal floorspace.
The levy is calculated by adding residential floorspace and communal floorspace used by residents then multiplying the total by a local area rate.
What Does This Mean for the Industry?
The introduction of the levy represents another significant regulatory and financial consideration for residential developers already navigating the requirements of the building safety regime.
Going forward, developers should ensure that levy liabilities are considered at the earliest stages of project planning, including land acquisition, viability assessments, funding arrangements and development agreements. Contracts may also require careful drafting to allocate responsibility for levy payments and any associated compliance obligations.
While the levy will undoubtedly increase development costs, it also reflects the Government’s policy objective that the industry should contribute towards addressing the legacy of historic building safety defects. With the commencement date fast approaching, those involved in residential development should now be reviewing their pipelines and preparing for the levy’s introduction.