The Building Safety Act 2022 (the “Act”) has had a significant impact on the development landscape since it was introduced. We have seen the development market slow significantly as a result.

The effects of the Act are set to continue and we will soon see the introduction of the Building Safety (England) Regulations 2025, that will come into force on 1 October 2026.

These regulations establish a new building safety levy (“Levy”) applicable to residential developments, specifically those providing at least 10 dwellings or 30 bedspaces in purpose-built student accommodation (though noting there is an exception for affordable housing).

The Levy is another new tax on an already hard-hit development sector and is payable by the developer to the relevant local authority.

The Levy rates are variable and set by the relevant local authority. Unsurprisingly, London developers will be required to pay the highest sums, with Kensington and Chelsea advertising Levy rates of £100.35 per square metre of chargeable floor space, while at the other end of the spectrum County Durham are advertising a rate of £12.70.

Brownfield developments are discounted to 50% of the advertised rates, and the full list of rates is available for viewing on the government website at “https://www.gov.uk/guidance/building-safety-levy-guidance/section-2-levy-rates-and-calculations”.

Any developer should therefore familiarise themselves with these, and factor in these costs as part of their due diligence.

The Levy is payable on all qualifying building control applications made on or after 1 October 2026. The provisions are not retrospective. Any developer working through the application process at present would be well advised to ensure they are in a position to submit their application before the deadline or be prepared to face a significant additional expenditure for their development.

The Levy becomes payable once works commence and must be paid before occupation or before the submission or acceptance of the final certificate.

Given the aim of the Levy is to raise £3.4bn over 10 years from residential developers, it will undoubtedly mean that even more developments are no longer financially viable. Additionally, where developments are constructed the increase in costs will lead to an increase in the purchase price of new housing.

These changes are being resisted by key groups such as the Home Builders Federation although the new charges still look set to go ahead, and so developers will need to be prepared.

Edwin Coe are able to assist with any questions or queries in relation to this new tax on property developers as well as on any other Building Safety issues. If you have any concerns, please do not hesitate to contact a member of the Edwin Coe Building Safety and Cladding Team.

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