The levy is intended to fund the remediation of historic building safety defects in existing buildings. This is to ensure that the development industry makes a contribution towards the cost of addressing historic building safety problems, and also to ensure that the financial burden does not fall on leaseholders.
What is the Building Safety Levy?
This is a statutory levy imposed on new residential buildings that developers must pay on building control applications/notices before completion of building work or occupation of the building (whichever is earlier).
The levy applies to developments that create new dwellings, new purpose-built student accommodation (PBSA) or involve a change of use to residential accommodation. It will be collected by local authorities who have building control statutory responsibilities.
Developers must pay the levy to the relevant local authority for the area in which the buildings are situated. If a single building is located on the boundary between more than one local authority area, the collecting authority is the one in which the greater part of the building is situated. The levy must be paid before the relevant completion certificate or final certificate for the project can be issued.
How the levy will work
The Building Safety Levy (England) Regulations 2025 (Regulation) sets out how the Building Safety Levy will operate.
For the purposes of the Building Safety Levy, the client is the person for whom the development project is being carried out. This is typically the developer, a development company or any other person or organisation commissioning the project.
If a client is submitting an application for building control approval and the works meet all the levy charging conditions, then a levy charge will be incurred.
Levy charging conditions:
The levy applies where all the following conditions are met:
1. The works must constitute, or form part of, a major residential development
A major residential development is a development of either:
- Ten or more new dwellings regardless of the number of exempt dwellings which that development includes
- Thirty or more PBSA bedspaces.
A PBSA is a building or part of a building that is designed or adapted for occupation solely or principally by those undertaking a full-time course or further/higher education.
A change of use from a non-residential building to dwellings or PBSA can also attract the Building Safety Levy even where the works are only internal. Where the change-of-use planning permission provides for ten or more dwellings or 30 or more PBSA bedspaces, the associated building control application is subject to the levy, provided the other charging conditions are met.
2. The works must result in the creation of new residential floorspace (also known as chargeable floorspace) within the new dwellings, PBSA and communal areas used by those dwellings
New residential floorspace can be created in the following main ways:
- Constructing a new building containing residential accommodation
- Conversion of an existing non-residential building into residential accommodation
- Extension or the creation of additional floorspace.
3. The client is not an exempt person
An exempt person is defined in the Regulation as a non-profit registered provider of social housing, such as a housing association, or a wholly owned subsidiary of a non-profit registered provider of social housing.
Joint ventures are not exempt persons, unless each party in the joint venture is itself exempt (i.e. a non-profit registered provider of social housing, or a wholly owned subsidiary of a non-profit registered provider of social housing).
The process
If all the levy charging conditions apply, the developer should submit a commencement notice to the local authority, which should include the relevant information in relation to all the works that are included in the application.
The local authority will issue the client with a levy liability notice (or a notice of no charge if no levy is payable) within five weeks from the date on which the commencement notice, including the levy information for all works, is submitted.
The levy liability notice will state the levy charge to be paid.
The levy can be paid at any point between receiving the levy liability notice and notifying the local authority of completion, which must be done when the works have completed. The whole levy charge must be paid before the completion certificate can be issued for any of the works contained within it.
Once the whole levy charge for the application has been paid, a levy payment certificate will be issued by the collecting authority within two weeks. This certificate provides official confirmation that payment has been received and should be retained for client records.
Calculating how much to pay
The Government has established the levy rate payable in each local authority area in which the relevant building is located.
The importance of 1 October 2026
The levy does not apply retrospectively. It only applies to building control applications submitted on or after 1 October 2026.
The levy does not apply to existing applications for dwellings or PBSA that were submitted before 1 October 2026, even if such existing applications are varied after 1 October 2026 (e.g. an amendment notice or change control application).
However, if an existing application is rejected and then is resubmitted on or after 1 October 2026, then the levy will apply.
Relief: previously developed land (PDL)
Development on previously developed land, will benefit from a 50% reduction in levy rate to reflect the often higher cost of developing this type of land. Land will qualify as PDL if it has, or had, a building on it at any time on or after 1 July 1948.
Land does not qualify for PDL relief where:
- The building is wholly underground
- The building is used for agriculture or forestry
- The land has been developed for mineral extraction
- The land has been developed for waste disposal by landfill.
What developers should do now
Developers should assess and address the levy liability at an early stage of the development project and ensure that their budget includes the payment for the levy charge. In addition, the development agreement/construction contract should clearly allocate responsibility for payment and any additional costs arising from a delayed payment, including safeguards in the event of a delay.
For many developers, failing to comply with the levy will mean that the completion certificate cannot be issued. It could also affect funding arrangements of the whole development project, sales, refinancing and contractual completion obligations.
How TWM can help
If you are considering a residential development project or have questions about how the Building Safety Levy may affect an existing scheme, our Commercial Property team can advise on the potential implications.
Taking advice at an early stage can help identify potential levy liabilities, ensure appropriate costs are factored into the development and put suitable contractual protections in place.
This article was co-authored by Commercial Property Paralegal, Eesha Karamat.