THE BUILDING SAFETY LEVY: NAVIGATING THE NEW REGULATORY LANDSCAPE
The Building Safety Levy comes into force on 1 October 2026 and imposes an additional charge on many new residential developments in England. This newsletter explains when the levy applies, how it is calculated, when payment falls due and what happens if the levy goes unpaid.
BACKGROUND
Since the Building Safety Act received Royal Assent in 2022, the construction and property industries have seen major reform to the way residential buildings are built and managed. The Building Safety Levy (England) Regulations 2025 are the latest stage in that process.
The levy is a tax charged per square metre of new residential floorspace. It applies to “major residential developments,” meaning schemes that create at least 10 dwellings or, for purpose-built student accommodation (PBSA), at least 30 new bedspaces. The threshold is tested against the planning permission for the whole development, so splitting a scheme into smaller building control applications will not avoid the charge.
The levy aims to shift the cost of building safety remediation away from leaseholders and taxpayers by raising funds centrally to address building safety defects across England. The Government’s target is to raise around £3.4 billion over roughly ten years.
HOW AND WHEN WILL THE NEW LEVY APPLY?
The levy applies to building control applications and notices submitted on or after 1 October 2026, whichever building control route the project follows. This covers full plans applications, higher-risk building applications to the Building Safety Regulator, initial notices given by registered building control approvers and any later updates to those applications and notices.
The levy is payable by the “named client” on the building control application. This will often be the developer, but project teams should check who is named on each application. The identity of the client can also affect whether an exemption applies.
Applications submitted before 1 October 2026 fall outside the levy, even if they are varied after that date. However, a pre-October application that is rejected and resubmitted after 1 October may become subject to the levy. A pre-October application will also not hold its position indefinitely if work has not properly started within three years.
Several exemptions can remove all or part of a development from the levy. These include social and affordable housing, homes built by non-profit registered providers of social housing, schools, hospitals and care homes, with further exemptions available. Where a development contains both chargeable and exempt homes, only the chargeable floorspace attracts the levy.
HOW IS THE LEVY CALCULATED?
The levy is calculated by adding the chargeable new residential floorspace to any chargeable communal floorspace (stairways, lobbies and residents’ gyms, for example), then multiplying the total by the rate for the local authority area where the development sits. Floorspace is measured as gross internal area (GIA) in square metres, in line with the RICS Code of Measuring Practice.
The Government sets the rates in the regulations, and each local authority area has two. The standard rate applies to most sites. A rate discounted by 50% applies where at least 75% of the land covered by the planning permission meets the statutory definition of “previously developed land,” reflecting the higher cost of developing brownfield sites.
Rates vary widely. To illustrate, the highest standard rate applies in Kensington and Chelsea at £100.35 per square metre, and the lowest in County Durham at £12.70. Standard rates in Leeds and Manchester are £24.57 and £28.44 per square metre respectively.
PAYMENT OF THE LEVY
The levy must be paid by the earlier of the “completion notice date” or the date on which the building, or any part of it, is first occupied. The completion notice date depends on which building control route the project follows. Payment goes to the local authority for the area where the development is located, which then passes the funds to the Government to pay for remediating building safety defects across England.
Whichever route the development follows, the named client must submit “building safety levy information” so the local authority can issue a levy liability notice setting out the amount due, or a notice of no charge where the development is exempt. Basic levy information must accompany the building control application itself, and an application that omits it may be rejected. The details required include the relevant planning permission and whether the works form part of a major residential development. For PBSA, the number of bedspaces must also be given.
If the levy is unpaid, the building control authority or Building Safety Regulator will withhold the completion certificate or final certificate for the development until payment is made. In practice, this can prevent the building from being used or occupied while the levy remains outstanding.
KEY TAKEAWAY
The Building Safety Levy introduces a significant new cost and procedural burden for developers of residential projects in England. Developers, funders and their project teams will need to understand the detail of the Building Safety Levy (England) Regulations 2025 to make sure their obligations are fully met.
Need more clarity on Building Safety matters? Don’t hesitate to get in touch. Our team is on hand to offer clear and commercial legal support.
This article contains information of general interest about current legal issues, but does not provide legal advice. It is prepared for the general information of our clients and other interested parties. This article should not be relied upon in any specific situation without appropriate legal advice. If you require legal advice on any of the issues raised in this article, please contact one of our specialist construction lawyers.
© Hawkswell Kilvington Limited 2026
