The Building Safety Levy, originally pencilled in for autumn 2025, was pushed back a year to give developers and local government time to prepare. That year has now run out, and the levy comes into operation in England on 1 October 2026.
Following our July 2025 piece on the draft regulations, here is a reminder of how the levy works and what has changed since.
The Basics: A Tax with a Purpose
The levy is a tax on new residential development intended to make those building new homes bear the cost of historic building safety defects rather than leaseholders. It is payable by the client named on the building control application, usually but not always the developer, and collected by local authorities as part of the building control process. The charge is not aimed only at developers who were responsible for historic defects.
The Building Safety Levy (England) Regulations 2025 (the “2025 Regulations”) were made on 19 November 2025 and apply only in England. Developers west of the Severn can therefore, for now at least, watch on from the sidelines.
The levy is separate from Community Infrastructure Levy and section 106 contributions rather than instead of them, so developers will need to budget accordingly.
Who Pays: Scale Matters, Height Does Not
Although the building safety problems that the levy is designed to fund are most often associated with high-rise blocks, the levy itself takes no interest in how tall a building is. A modest estate of two-storey houses can be caught as easily as a tower, because what matters is the size of the development rather than its height.
A charge arises if all the charging conditions in regulation 15 of the 2025 Regulations are met, being:
- The work creates a new building containing residential floorspace, introduces residential floorspace into an existing building, or increases the residential floorspace of an existing building;
- The work is major residential development, or forms part of a wider major residential development, which for the levy means at least 10 dwellings or at least 30 bedspaces of purpose-built student accommodation (though it should be noted here that the levy is not confined to new-build schemes; and that a conversion that creates new homes, even one relying on permitted development rights, can be caught just as readily); and
- The named client is not an exempt person.
Levy information must be supplied from the first dwelling, but the charge bites only once the threshold is reached. However, anyone contemplating slicing a scheme into neat parcels of nine will, sadly, be disappointed, because the test looks at the whole development authorised by the planning permission.
Even where a development is large enough to be caught, there are several types of exemption. Some types of building fall outside the levy altogether, including care homes, hospitals, hotels and school accommodation. Some types of home are exempt, most notably qualifying social and supported housing, even where they sit within an otherwise chargeable scheme.
Finally, some clients are exempt, namely non-profit registered providers and their qualifying wholly owned subsidiaries, although inviting a housing association to the party will not make a whole joint venture exempt, because every named client must qualify. Whatever the exemption, the scheme must still supply levy information and obtain a notice of no charge, so keeping quiet and hoping nobody asks is not an option.
The Numbers: A Postcode Lottery
The charge is calculated on chargeable residential floorspace, measured by gross internal area, multiplied by the local authority rate. Kensington and Chelsea, perhaps unsurprisingly, heads the table at £100.35/m², while County Durham comes in at a comparatively modest £12.70/m².
Rates are not indexed annually and are expected to be reviewed periodically through new regulations, so clients should expect the occasional jolt rather than a gentle drift. Developments on previously developed land get a 50% discount provided at least 75% of the consented site qualifies. Development carried out under permitted development rights automatically benefits from the lower rate, without needing to pass the 75% test.
Payment: The Sting in the Tail
The levy is payable in a single tranche after a levy liability notice has been given and must be paid by the earlier of completion notification and first occupation. No completion certificate will be issued for any of the works until the whole levy for that application is paid, which can hold up handover and sales. On phased schemes, the first homes to complete may trigger payment for the whole application.
What Has Changed: Tweaks Rather Than Upheaval
The Building Safety Levy (Amendment) (England) Regulations 2026 come into force on 1 October 2026. Most of the changes are housekeeping, although the revisions to previously developed land are more significant. The main changes are as follows:
- Previously developed land: Wholly underground buildings and unlawful operations no longer count, and underground parts beyond a building’s footprint are ignored in the 75% calculation. “Building” now expressly includes permanent structures, surfaced areas and plant, which puts beyond doubt that land occupied by something as unglamorous as a car park or a concrete yard can count.
- Procedure: Clients must be told of a spot check within five weeks, levy update notices are aligned with applications, and liability notices are cancelled where a review or appeal finds nothing is payable. If a client disagrees with the council’s decision, it can request a review within 28 days and, failing that, appeal to the First-tier Tribunal.
- Tidying up: The building control forms now make clear that student accommodation is counted by bedspace rather than as dwellings, levy information is required for staged higher-risk building applications. Plus, in what must be the most satisfying correction in the whole instrument, the table of local authority rates has been amended so that “St. Helens” becomes “St Helens”, finally relieving Merseyside of a rogue full stop.
Transition: Beating the Clock
When it comes to timing, it is the date of the building control submission, not the planning consent, that decides whether you are in or out. Building control applications and initial notices properly made before 1 October 2026, and later variations of them, fall outside the levy.
The trap is that a rejected application resubmitted after that date is caught, so anyone racing to beat the deadline should ensure the submission is complete, or they may find themselves back at the start line with a levy to pay.
The Takeaway
For any scheme that falls within its scope, the levy is now simply part of the cost of development, and it is far better built into acquisitions, appraisals and funding from the outset than discovered at the eleventh hour.
It is also worth thinking about how the cost is allocated between the parties in land, development and joint venture agreements, and about keeping good records of floorspace, exemptions and site history from day one, since that evidence will matter if the levy calculation is ever questioned. The levy may have taken its time to arrive, but it is here now, and a little preparation should go a long way.
