What is the Building Safety Levy?
The Building Safety Levy (England) Regulations 2025 (“the Regulations”), approved by Parliament in November 2025, introduces a new Building Safety Levy (BSL) which will apply to the development of most new residential buildings in England from 1 October 2026. The levy forms part of the wider reforms introduced under the Building Safety Act 2022 and is intended to contribute towards the cost of remediating unsafe cladding and other historic building safety defects.
The Government’s stated intention is that the cost of remediation should not fall on leaseholders. In practice, however, the levy represents an additional cost burden for developers, which will need to be factored into development appraisals alongside existing obligations such as Section 106 contributions and the Community Infrastructure Levy (CIL). The Government has indicated that the average cost may be in the region of £3,000 per dwelling, although the actual amount payable will vary depending on the size, nature, and location of the development.
Given the current pressures on scheme viability, particularly in the residential sector, the levy is likely to become an important consideration when structuring and timing development projects.
Why is the building control stage now important?
A key feature of the new regulations is that the liability for the levy will arise at the building control stage, rather than at the point of planning permission or commencement of development. In practical terms, the levy will apply where a building control application is submitted on or after 1 October 2026. Developments which reach that stage prior to the implementation date will not be subject to the levy.
This represents a notable departure from the triggers developers are typically familiar with. For example:
- CIL liability is generally triggered on commencement of development; and
- Section 106 obligations are usually tied to occupation or implementation triggers set out in the agreement.
For developers, this new stage of financial liability is going to be significant for schemes that are currently progressing through the planning system. It is therefore important for developers to be mindful about whether their projects can realistically advance to the building control stage before the levy comes into force.
How will the BSL be calculated?
The amount payable under the BSL will be calculated by reference to the gross internal area of the residential floorspace created by the development. In broad terms, the levy will operate on a per square metre basis, with the applicable rate applied to the total qualifying residential floorspace within the scheme.
Unlike CIL, which is set locally by each charging authority, the BSL will be set nationally by the Government, with the relevant local authority responsible for calculating and collecting the payment as part of the building control process.
Find out more about the rates for each local authority – Building Safety Levy: Guidance
Lower levy rates are expected to apply to previously developed (brownfield) land. By applying a lower levy rate to such sites, the Government aims to reduce the risk that the BSL could undermine the viability of regeneration-led development. Conversely, higher levy rates may apply to greenfield developments, where development values are typically stronger, and the additional levy is therefore considered less likely to affect scheme viability. The intention is that greenfield schemes should bear a proportionately greater share of the levy burden where the underlying land economics allow.
Thus, the Regulations will introduce a 50% reduction for brownfield developments where at least 75% of the land qualifies as previously developed land under the Regulations.
Tempted to change the plan?
The legislation includes measures to prevent developers from avoiding liability by artificially subdividing developments or structuring schemes with the intention of falling below applicable thresholds.
Local authorities will have powers to assess whether development proposals have been arranged in this way and may apply the levy accordingly where avoidance is identified.
Are you exempt from the Building Safety Levy?
The Regulations provide for several exemptions where the levy will not apply. These exemptions are intended to ensure that the levy does not hinder the delivery of certain types of development which are considered to serve an important public, social or policy objective.
One of the key exemptions relates to affordable housing. Residential units which fall within recognised affordable housing tenures (such as social rent, affordable rent, or shared ownership) will generally not attract the levy.
Similarly, certain forms of social housing development delivered by registered providers are expected to fall outside the scope of the levy.
In addition, the levy will not apply to certain forms of development where residential accommodation is ancillary to another primary use, or where the development type is considered outside the core purpose of the levy. Examples include care homes, hospitals, and other specialist accommodation.
Developers should also be aware that the availability of exemptions may depend on the precise structure and tenure mix of a scheme, as well as the classification of the development at the building control stage. Careful consideration of the scheme composition at an early stage may therefore help ensure that any available exemptions are properly identified and applied.
Exemptions can be found here:
Ordinary residential dwellings: exemptions
What should developers do now?
Further detail on the operation of the BSL is expected as the implementing regulations are finalised. However, the Government’s confirmation of the October 2026 implementation date provides a clear signal that the levy will soon become a permanent feature of the residential development landscape.
Developers should assess whether schemes can realistically reach the building control application stage before 1 October 2026. For schemes that will not meet this deadline, levy costs should be factored into viability appraisals and funding assumptions at an early stage.
Developers should also review residential floorspace, thresholds and exemptions, including whether a scheme qualifies as previously developed (brownfield) land, which attracts a 50% discounted rate, or benefits from exemptions such as affordable or social housing.
Given that liability sits with the “client” named in the building control application, responsibility for the levy should be clearly addressed in development agreements, funding documents, and building contracts, and early engagement with building control authorities is advisable to avoid delay or dispute.
How Moore Barlow can help
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