By Gareth Ellis RIBA, Associate Architect at CAD Architects
What is the Building Safety Levy and why is it being introduced?
The Building Safety Levy is a government tax on new residential buildings in England, that will come into force on 1st October 2026.
It is being introduced is to collect funds from developers to help pay for remedial works addressing past safety defects such as dangerous cladding in high rise residential buildings. It intends to raise £3.4 billion over 10 years.
The Levy applies irrespective of whether the developers that will now be paying it were responsible for previous building safety failures. This reflects the Government’s commitment that neither the taxpayer nor tenants should pay for remediation of these safety defects, with the burden falling on the housing development industry instead.
The Building Safety Levy was initially legislated for under the Building Safety Act 2022 and has been the subject of two consultations. Its implementation has been delayed by 12 months by the current government to allow the industry time to adjust to the changes.
Now the Levy is set to apply to building control applications submitted on or after 1st October 2026. Applicable to most new residential developments of 10+ units, it is calculated per square metre, with rates varying by local authority and a 50% discount for brownfield sites.
The Levy will be charged before completion of building work and occupation of buildings, local authorities collecting the payment upon building control approval.
Key timeline leading up to October 2026
June 2017: Grenfell Tower tragedy occurs, triggering nationwide review of building safety and cladding.
- February 2021: The government officially announces the proposal for the Building Safety Levy.
- November 2022 / January 2024: Consultations took place with industry stakeholders regarding the Levy’s design and implementation. A public consultation on the Levy’s design expanded its scope beyond high-rise buildings to most new residential developments.
- April 2022: The Building Safety Act 2022 receives Royal Assent, creating the legal framework (Section 58) for the levy.
- March/April 2025: Government confirms the start date is postponed from Autumn 2025 to Autumn 2026 to give developers more preparation time.
- July 10, 2025: The draft The Building Safety Levy (England) Regulations 2025 are published, setting out specific rules.
- 19 November 2025: The regulations are officially made.
- October 1, 2026: The Building Safety Levy starts in England. It applies to applications for building control approval on or after this date.
- Post-2026: The Secretary of State is required to review the levy rates every three years.
Who will the Building Safety Levy apply to?
The Levy will apply to building control applications for larger scale residential developments in England (including mixed-use buildings) submitted on or after 1st October 2026.
Including both new build and conversions, the Levy will apply regardless of building height.
The scope of the Levy includes:
- Privately-owned houses and flats with 10+ units
- Build to rent schemes with 10+ units
- Retirement housing with 10+ units
- Purpose-built student accommodation with 30+ bedspaces
Who will be exempt?
There are a few exemptions, as follows:
- Social and affordable housing: Non-profit registered providers of social housing and their wholly-owned subsidiaries
- Specialist accommodation: NHS hospitals, care homes, criminal justice accommodation, children’s homes, domestic abuse shelters and armed forces accommodation
- Internal refurbishments
It is anticipated that developments that have already begun the building control process before the launch date of October 1st 2026 will also not be subject to the Levy.
How will the Levy be calculated and applied?
The Levy will be calculated using the gross internal area (GIA) of floorspace, including communal spaces. Two levy rates have been published for each local authority in England, reflecting local house prices. Each local authority area has a brownfield development rate, expressed in £/m2 for GIA and a corresponding greenfield rate.
A 50% discount on the Levy will apply to brownfield land (where the development is on previously developed land). This discount will only apply where 75% or more of the land within the planning permission redline is brownfield land.
Developers will be required to submit information for the Levy, including floorspace, upon commencement of works.
The local authority will then calculate the Levy due within five weeks.
No part of a development will receive a building control completion certificate or a final certificate (for buildings over 18m in height) until the entire Levy liability has been paid. This means occupation will not be allowed until the Levy has been paid in full.
The potential impact on developers
It is clear that the Building Safety Levy will introduce significant financial and administrative burdens on developers and could directly impact project viability, cashflow, and design for some developments.
As it is based on Gross Internal Area (GIA), it risks making marginal sites unviable, potentially
halting some developments or forcing developers to alter the project scale, prioritise brownfield sites, or consider sites in a different local authority area.
The rate varies by local authority, creating higher burdens in high-value areas like London and the South East.
In addition, there is likely to be a greater impact on specific sectors. Build-to-Rent and Purpose-Built Student Accommodation face added strain as these developments are large-scale by nature.
Developers must also factor in administrative costs for calculating GIA and dealing with the complexities of the Levy, as well as considering the potential impact on cashflow.
There may be some unintended consequences of the Levy, as developers respond to the new challenge. For example, some developers may shift toward refurbishment rather than new builds to avoid the Levy.
Practical steps developers should take now to prepare
The clock is ticking for affected developments. Here are some steps developers should take now:
- Identify all projects expected to submit a building control application on or after 1st October 2026, so you know which projects will be affected
- Accelerate applications: Aim to submit building control applications (full plans, initial notices, or Gateway 2) before 1st October 2026 to lock in an exemption from the Levy for those projects.
- Consider re-designing projects to increase the proportion of non-residential space or reduce GIA to lower the Levy liability.
- Prioritize development on brownfield land, as this qualifies for a 50% reduction in the levy rate.
- Ensure precise measurement of “chargeable residential floorspace” (including communal areas) as defined in the RICS Code of Measuring Practice 6th Edition.
- Confirm if projects qualify for exemptions (e.g. social housing, supported housing) and ensure all joint venture partners are compliant to maintain exemptions.
- Ensure building control applications are complete to avoid rejection. A re-submitted application post-1 October 2026 will make a project liable, even if the initial submission was earlier.
- Work with legal and planning advisors to manage the new compliance requirements, particularly for complex build-to-rent or PBSA schemes.
The Government has indicated that some form of exemption or relief for SMEs may be considered. However, no firm proposals have been confirmed, and it is considered unlikely that any such measures will be in place ahead of the October 2026 implementation date.
In summary, developers should act now to assess the impact of the Building Safety Levy on their own project plans and take urgent proactive steps to mitigate the impact.
You can find out more about the Building Safety Levy here. https://www.gov.uk/guidance/building-safety-levy-guidance
There is also specific advice for developers in Cornwall here. https://www.cornwall.gov.uk/planning-and-building-control/building-control/building-safety-levy/
Our team at CAD Architects is ready to provide further guidance and support, helping you to navigate the complexities of the Building Safety Levy and maximise returns on your development project.
Contact us by email at studio@cadarchitects.co.uk