The Building Safety Levy: An overview

The Building Safety Levy (the Levy) is a tax on certain new residential accommodation in England and is due to come into force on 1 October 2026. It is not retrospective. It will be charged on all applications for building control approval that meet the “Levy Charging Conditions”.

Overview

The Levy Charging Conditions are:

1. The works form part of a “major residential development”.
2. They result in the creation of “more residential floor space”.
3. The named client in the application for building control approval is not an “exempt person”.

Condition A

A “major residential development“ is a development with 10 or more new dwellings or 30 or more new bed spaces in the case of purpose-built student accommodation (PBSA).

• Dwellings: In calculating whether the threshold of 10 new dwellings is met, all residential accommodation being provided as a result of the planning permission and which constitute a dwelling is taken into account. However, once it is established that the levy is chargeable, only “ordinary residential dwellings” are charged (see below).
• PBSA: The Levy Regulations define PBSA as “a building, or part of a building, that is designed or adapted for occupation solely or principally by persons undertaking a full-time course of further or higher education at a qualifying institution.”
• There are provisions to prevent developers from putting in multiple building control applications for a development, each of which individually is under the threshold for a major residential development. The “major residential development” test is applied to the planning consent under which the building control application is made.

Condition B

The Levy is not chargeable unless the development results in the creation of more residential floor space. “Residential floor space” means floorspace allocated to “ordinary residential dwellings”, PBSA and/or communal areas that are intended to be used by “ordinary residential dwellings” or PBSA.Ordinary residential dwellings are all dwellings which are not social or support housing (there are some concerns about the definitions of social and support housing in the Regulations) or dwellings within exempt accommodation. Exempt accommodation is defined and includes hotels, hospitals, care homes and school accommodation.

Condition C

The Levy is not chargeable if the client (or clients) named in the building control application are exempt persons. Exempt persons are non-profit registered providers of social housing.

If the Levy Charging Conditions are met

If the Levy Charging Conditions are met, the building control application will be chargeable to the Levy. The mechanics for the calculation and payment of the Levy are complex, but the key points are:

The Levy is charged on all the “relevant residential buildings” within the approved building control application and becomes payable broadly on the earlier of completion or first occupation of the first of those “relevant residential buildings”. This means that if a single building control application is made on a multi-building or even a multi-phase scheme, completion/occupation of the first relevant residential building in the scheme will trigger the requirement to make payment in relation to all the relevant residential buildings in the scheme, even those for which building work may not have started. “Relevant residential buildings” mean buildings which are not exempt (which includes hotels, hospitals, care homes and schools) and which are, or which contain, ordinary residential dwellings or PBSA bedspaces or which contain (alongside dwellings or PBSA bedspaces) communal space for use by the residents of ordinary residential dwellings or PBSA.

The Levy is calculated by multiplying a) the chargeable floorspace that would be created within new or existing relevant residential buildings, if all the approved building work were completed, by b) the applicable “Area Rate”. Click here to see the rates for each area. The chargeable floorspace encompasses new ordinary residential dwellings, new PBSA bedspaces and certain new communal spaces.

The Area Rate is discounted by 50% if the scheme is on “Previously Developed Land” (PDL). PDL is land that had a building on it on or after 1 July 1948. Certain building types or land uses are excluded from the definition of PDL. These are where the most recent building was for agricultural or forestry use, the land has been developed for minerals extraction, or the land has been developed for waste disposal by landfill. The PDL rate applies if 75% of land in the red line boundary for the planning permission under which the approved chargeable scheme is to be built out meets the PDL definition. It is not clear whether this percentage is determined by looking only at the building footprint or the footprint, curtilage and surrounding facilities).

The Levy is payable to the local authority for the area in which the development is carried out, known as the “collecting authority”.

Payment is triggered when the collecting authority issues a Levy Liability Notice to the client named in the building control application, setting out the amount of the charge, a breakdown of that amount; and the building control application to which it relates.

The collecting authority must issue the Levy Liability Notice within five weeks of receipt of the Commencement Notice (which the client is already required to give to the relevant building control authority). When the levy comes into force the client will have to send detailed information about the residential buildings within the scheme with the notice.

Once the Levy is paid, the collecting authority must issue a “Levy Payment Certificate” which states the amount paid within two weeks of receipt of payment.

If the Levy isn't paid on the relevant date (on the earlier of completion or first occupation) then the building control authority must not issue or confirm any completion certificate or final certificate in respect of the works.

Considerations when preparing for the Levy

In preparing for the Levy, developers may wish to consider:

• Pre-deadline applications – Applications made before the Levy comes into force will not be chargeable, even if they are subsequently amended. For schemes that already have planning, there is therefore a strong financial incentive to get the building control application in before the 1 October 2026 deadline. For schemes involving HRBs this may be more difficult, because of the stringent requirements for gateway 2 applications.
• Building control structuring – Developers that tend to structure their building control applications as global applications for any scheme may wish to consider whether to make staged applications for different phases of the scheme. This won’t change the amount of Levy payable (assuming the whole scheme is built out), but it will enable the Levy to be paid in tranches, (as the Levy is charged on the chargeable space on an application-by-application basis).
• Client elections – On schemes where multiple parties may constitute “clients” for the project for the purposes of the Building Regulations (broadly, anyone for whom the works are carried out), the parties may consider an election that only one party is to be treated as the client. That party should be named in the building control application and will be liable for the Levy.

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