Building Safety Levy: Assessment of Impact (Impact Assessment, 2025)

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Building Safety LevyAssessment of Impact

General description of the measure
The Building Safety Levy (the levy), as provided for in the Building Safety Levy (England) Regulations
2025, is a new tax, charged on new residential developments that require building control approval
in England (save for those that are exempt – see below), for the purpose of meeting building safety
expenditure (as defined in the Building Act 1984, section 105C).

Background to the measure
Section 105C Building Act 1984 (inserted by section 58 of the Building Safety Act 2022), makes
provision for the imposition of the levy in Regulations for the purpose of meeting building safety
expenditure.

A public consultation on the proposed Building Safety Levy design ran from 22 November 2022 to 7
February 2023 and sought
views on the design and implementation of the levy. A response to this
consultation was published on 23 January 2024.

A further consultation ran between 23 January 2024 and 7 February 2024 and sought views on levy
calculation methodology, collection process, exemptions and disputes/appeals. A response to this
consultation was published on 24 March 2025.

Policy objective
The Exchequer has allocated £5.1 billion of funding from general taxation to address life-critical
building safety remediation. The levy aims to recover from developers the balance required to
complete remediation without further recourse to public funds or burdens on leaseholders. The
estimated target for the levy is £3.4 billion to be raised over around 10 years; exchequer impacts are
below.
The levy is designed to ensure a fair contribution from the development sector towards remediation,
without placing further burdens on leaseholders or the taxpayer.

Who is likely to be affected
The primary impact of the levy will be on developers of chargeable residential buildings . Others who
will be affected include local authorities, Building Control Authorities (BCAs), and Registered Building
Control Approvers (RBCAs) .

Detailed proposal
Operative date
The Building Safety Levy (England) Regulations 2025 (the Regulations) have been laid in Parliament
in draft subject to the affirmative Parliamentary procedure. Subject to debates in both Houses and
the Regulations being made, the Regulations will come into force on 1 October 2026.
Current law

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The levy is a new tax. Section 58 of the Building Safety Act 2022 gave the Secretary of State the power
to make regulations for the imposition of a levy on relevant applications or notices, for the purposes
of meeting building safety expenditure, by inserting section 105C into the Building Act 1984.

Proposed revisions (Key features of levy implementation)
The Regulations set out how the levy will operate, and this section provides some information about
its implementation.
The levy will apply to any application for building control approval with full plans, a building control
approval application submitted to the Building Safety Regulator, or an initial notice, relating to the
provision of 10 or more new dwellings, or 30 or more new bedspaces in purpose-built student
accommodation in England, submitted on or after 1 October 2026, where the levy charging
conditions are met.
Exemptions from the levy charge include developments of fewer than 10 dwellings, affordable
housing, prisons, criminal justice accommodation, schools, children’s homes, care homes, hospitals,
domestic abuse refuges, hotels, hostels, almshouses, temporary accommodation for homeless
people, hospices and any dwellings built by non-profit registered providers of social housing.
Local authorities will act as the levy collection agents. The ongoing costs of administering the levy
will be met from levy receipts.
The Secretary of State has appointed local authorities as calculation and collection agents because:

• as existing statutory existing guardians of the building control regime, they have established
systems, data, knowledge, and relationships in place with the residential development
sector;
• they have proven systems in place for the collection of taxes and fees; and
• as a Building Control Authority (BCA), they receive some of the building control applications
and notices, which will trigger the imposition of the levy.
The client, defined as the person or organisation commissioning the construction project, will be
responsible for payment of the levy, not the contractor or individual performing the actual
construction work. The application process will differ slightly depending on the building control
route adopted. However, in all routes the client will be required to provide information, supported
by documentation, that will enable the relevant local authority to calculate their levy liability and
carry out spot checks of information. The consequence of failing to provide relevant information is
that the relevant building control authority may reject the application, or under the RBCA regime will
reject the initial notice.
The sanction for non-payment of the levy will be that the BCA may withhold the completion
certificate (or in the RBCA regime, will reject the final certificate). Where disputes arise, either on
the amount of levy liability or on whether the levy applies, a resolution will be sought in the first
instance with the local authority, appeals can then be made to the First Tier Tribunal.
Summary of impacts
Exchequer impact (£m)

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2025 to 2026 2026 to 2027 2027 to 2028 2028 to 2029 2029 to 2030
0 0 +55 +245 +345
These figures are set out in Table 3.1 of Spring Statement 2025 and have been certified by the
Office for Budget Responsibility (OBR).
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Equalities impacts
The tax is not expected to directly impact individuals or groups sharing protected characteristics, as
it will be a tax levied on businesses. Although individuals may be required to provide some basic
information as part of the building control process, no group with any protected characteristic is
more (or less) affected by this requirement than any other group.
Impact on business including civil society organisations
The levy will have an operational impact on developers in England.
When appraising a housing site, a developer will consider the total revenue they can obtain from
selling the total stock of units (i.e. the gross development value) and the total cost they will incur for
development (for example build costs, site preparation costs, finance costs, marketing costs), with
an allowance for a certain level of profit. The remaining amount is the maximum price they would be
willing to pay for the land (land value residual). A developer will not pay more than the land value
residual and therefore if a cost increase cannot either be absorbed by the landowner, absorbed by
the developer, or offset to the consumer (house-buyers), the site will become unviable.
Sites are more at risk in areas where the residenti al land value is lower. There is a high level of
correlation between house prices and residential land value. Levy rates have been set such that rates
are lower in areas where house prices are lower and viability is more stretched. This is expected to
reduce negative impacts on housing supply, relative to a flat rate. Additionally, sites built on previously
developed land typically have higher build costs me aning that viability tends to be lower on these
sites. A 50% reduction in levy rates will be applied to residential properties that are built on previously
developed land. Again, this is expected to reduce negative impacts on housing supply. On average the
levy charge for a home represents 1.1% of house prices on non-previously developed land and 0.55%
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on previously developed land and is therefore expected to have only a very small negative impact on
supply. 
There will be one-off costs to developers, architects, and building control entities relating to
familiarisation with levy. It is estimated that training costs related to familiarisation with the
measurement basis of the levy charge and data submission requirements will be £19.8m.
Ongoing costs related to measurement; data submission and payment are estimated to be £9.8m
per annum for developers.

1 January 2024 ONS HPI data on mean house prices, year ending March 2023 - data used to set levy rates.

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Small and micro businesses are not exempt from the levy but sites of fewer than 10 dwellings are
exempt from the obligation to pay the levy. Sites of fewer than 10 dwellings are built out, almost
exclusively, by small and medium developers.

Impact on individuals, households and families
This measure is not expected to directly impact on individuals as the levy will only be paid by
housebuilders of sites of 10 or more units (or 30 or more bedspaces if the works are purpose-built
student accommodation). This measure is not expected to impact on family formation, stability or
breakdown.

There is no (or at best negligible) scope for “pass through” of the levy into house prices. This is
because the vast majority of housing transactions, roughly 89%,
2 are on existing homes, making it
easy for consumers to switch away from new builds, so difficult for developers to “pass on” costs
from a tax.

Operational impact
Acting as calculation and collection agents for the levy represents an additional statutory burden for
local authorities. T he government has completed a new burdens assessment and will provide local
authorities with a grant under s31 of the Local Government Act 2003. £37.6m will be shared
amongst 295 local authorities to fund LAs’ set-up costs. This recognises that there are costs common
to all local authorities whilst also considering variable costs based on activity, size and low/high costs
differentials across England. These grants will be made in advance of levy commencement.

To manage the costs of administering the collection of the levy, local authorities will be able to
recover administrative costs relating to their role as collecting agents from the levy, estimated to be
£6.3m per annum.
Local authorities will deduct the costs of administering the levy from levy revenue
prior to paying net receipts to central government. There are also costs of £0.4m per annum to the
entities that undertake the building control function and who will be responsible for calculating the
levy charge and processing payments.
Monitoring and evaluation
The overall target levy revenue of £3.4bn may need to be adjusted as data on the number of
buildings that require remediation, and the extent of building safety expenditure required is
updated.
In addition to passing the levy receipts back to central government, local authorities will also be
required to provide the Secretary of State with quarterly management information which will
include (a) invoiced amounts (b) levy receipts and (c) levy revenue to be transferred to central
government. This management information will assist in forecasting revenue and will form part of
evaluating aspects of the levy policy and design such as rates and exemptions, at reviews to be
carried out regularly and at least every 3 years.

2 CMA – Housebuilding market study – February 2024 : “ Second-hand home sales account for the majority of
transactions in the housing market: in England and Wales transactions for new build homes made up only 11%
of total housing market transactions, on average, between 2013-14 and 2022-23.”

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As the levy falls outside of the scope of the better regulation framework and a
regulatory impact assessment is not required we have followed the structure of a Tax
Information and Impact Note (TIIN) normally published for a new charge such as a tax,
duty, or levy. As the Building Safety Levy will be administered by local authorities, a TIIN
has not been produced, however we have produced an assessment of impact which
broadly follows the TIIN structure.
The Minister has read this assessment of impact and is satisfied that given the available evidence, it
represents a reasonable view of the likely costs, benefits and impact.
Signed: Alex Norris
Parliamentary Under Secretary of State for Building Safety, Fire and Local Growth
Date: 10
th July 2025