Building Safety Levy: what developers and brokers need to know

The Building Safety Levy comes into effect in England on 1 October 2026, introducing a new cost for qualifying residential developments. For developers and brokers, understanding whether a scheme is liable, and ensuring the cost is properly accounted for within development funding, will now be an important consideration.

The Building Safety Levy has been introduced to help fund the remediation of historic building safety defects. It applies to all developers, including SMEs, where their schemes meet the relevant thresholds, regardless of whether they have previously developed buildings affected by these issues.

The levy applies in England only, with Scotland and Wales operating separately.

At Atelier, we have been looking closely at the new requirements and what developers and brokers need to consider when planning and funding a development.

Which developments does the Building Safety Levy apply to?

The levy applies where new chargeable residential floorspace is created on schemes comprising:

• 10 or more homes; or
• 30 or more PBSA bedspaces.

Importantly, the threshold is assessed across the wider planning scheme, rather than separately for each building control package.

Build to Rent is treated in the same way as build-to-sell, while commercial-to-residential conversions and extensions that create additional residential floorspace can also be caught where the relevant thresholds are met.

Social and supported housing floorspace is exempt, while care homes, hotels and hospitals are excluded.

Which date determines whether the levy applies?

One of the most important points for developers is that the relevant date is the building control submission – not the date planning permission was granted or work started on site.

For schemes seeking to remain outside the levy, developers should obtain written evidence that a complete and valid building control application or initial notice was received by the correct body before 1 October 2026. National guidance refers to submission before 1 October; it does not require approval or acknowledgement to have been issued before that date.

For initial notices submitted to a Registered Building Control Approver (RBCA), developers should also confirm that the notice has been accepted, or that the five-working-day rejection period has expired without rejection, before relying on the levy saving. If a submission is rejected and subsequently resubmitted on or after 1 October, the levy will apply, subject to the usual charging conditions.

What happens if the scheme changes later?

Variations to the same building control works submitted before 1 October remain outside the levy, but a fresh application may be caught. Importantly, the test relates to the scope of the building control works rather than simply whether the planning permission has materially changed. Developers should confirm the position with their relevant building control adviser.

For Higher-Risk Buildings (HRBs), the relevant route is an application to the Building Safety Regulator (BSR), rather than an RBCA initial notice.

Can you submit building control before planning consent?

Potentially. Building control and planning are separate processes, so it may be possible to make a building control submission before planning consent has been secured.

However, before relying on an early submission to achieve a levy saving, developers should confirm its validity, receipt date and scope, and take appropriate professional advice where required.

How is the Building Safety Levy calculated?

The levy is charged against chargeable Gross Internal Area (GIA), with the applicable rate determined by the local authority in which the development is located.

Rates vary significantly across England.

For example, the standard rate in Westminster is £98.01/m², compared with £50.87/m² in Cambridge, £42.97/m² in Bristol and £28.44/m² in Manchester.

The full list of published rates for England can be found here: https://www.gov.uk/guidance/building-safety-levy-guidance/section-2-levy-rates-and-calculations

This makes establishing both the chargeable GIA and applicable local authority rate an important part of assessing the additional development cost.

Could your scheme qualify for the 50% rate?

A 50% reduction applies to qualifying Previously Developed Land (PDL), but developers should be careful about assuming that anything commonly described as a ‘brownfield’ site automatically qualifies.

Broadly, PDL includes land containing lawful permanent buildings or structures now, or at any point on or after 1 July 1948 – even if they have subsequently been demolished. The 1948 date is a historic cut-off; it does not mean the building itself must have been constructed after 1948. Certain exclusions apply, including agricultural and forestry buildings, mineral extraction and landfill.

At least 75% of the wider planning permission redline must qualify as PDL for the reduced rate to apply. Importantly, this is a land-area test, not a comparison between existing and proposed floorspace, and is assessed at the grant of planning permission, or the start of development if earlier.

For chargeable schemes with planning permission through Permitted Development Rights (PDR), the reduced rate applies without having to satisfy the 75% PDL test. This means, for example, that a qualifying barn conversion under PDR may benefit from the lower rate. However, demolishing a barn and replacing it with a new development under full planning permission would not qualify simply because a barn previously stood on the site.

For other developments, historic land use and the planning redline should therefore be reviewed carefully when assessing whether the reduced rate applies.

What does this mean in practice?

The treatment of individual developments can vary depending on what is being created.

These examples underline the importance of looking at both the scale of the overall scheme and the new residential floorspace being created.

What does the Building Safety Levy mean for development funding?

For developers and brokers arranging development finance, the levy should now form part of the conversation from the outset.

There are four key areas to consider:

Cost
Establish the chargeable GIA and applicable local authority rate and ensure the resulting levy is properly reflected within the development budget.

Rate
Establish whether the development qualifies for the reduced PDL rate or benefits from the PDR route.

Funding
Make sure sufficient funds will be available when the levy becomes payable.

Timing
Consider how the timing of payment interacts with certification and ultimately the exit from the development facility.

The last point is particularly important.

The Building Safety Levy must be paid before the building control completion certificate can be issued.

For developers and brokers, the key is to identify the position early and ensure the levy has been properly accounted for within both the development appraisal and funding requirements.

Talk to us

If you are looking at a new development and want to discuss how the Building Safety Levy should be factored into your development finance requirements, speak to the Atelier team.

Our team can work with you and your professional advisers to understand the funding requirements of your scheme and ensure relevant development costs are considered from the outset.

This article is intended for general information only and does not constitute legal, tax or building control advice. Developers should seek appropriate professional advice in relation to individual schemes.