Insights 22.9.21 Author: Robert Maas

The Building Safety Levy

Insights 22.09.2021 Author: Robert Maas

Hot on the heels of its proposed Residential Property Developer Tax the Government have issued a Consultation document for a new proposed Building Safety Levy.

This levy is being introduced by the Buildings Safety Bill, which is currently going through Parliament and introduces a new section 105C to the Building Act 1984. Like the Residential Property Developer Tax, the levy is intended to contribute to the costs of removing unsafe cladding in blocks of flats. The Building Safety Levy will apply to developments in England seeking building control approval for the construction of new high-rise residential buildings, care homes, and hospitals which are 18 metres or more in height or at least 7 storeys.

There will be exclusions for affordable housing and for hospitals. The Government is also minded to exclude from the levy those refurbishments that require building control approval.

It is intended that there should in future be three Gateways in relation to such developments:

  • Gateway 1 will be the grant of planning consent
  • Gateway 2 will be when the developer seeks approval for building work to commence
  • Gateway 3 will be on completion of building work and this will require building control approval before the building can be occupied

It appears that payment of the levy will be required at Gateway 2 based on the plans and any necessary adjusting payment will be made at Gateway 3.  There will be a strong incentive to pay the tax, namely that the building will not be certified as available for occupation until the levy has been paid.  The government is considering a possible scheme for small and medium-sized enterprises to pay the Gateway 2 tax by instalments during the building period.

The Consultation puts forward two options for calculating the levy:

  • A charge per square metre of the internal floor area of the building, or
  • A fee per residential unit within the scope of the levy

The Government has not indicated the likely rate at which the levy will be charged. It is minded to vary the rate depending on location to reflect different property values.

What next?

If you have any questions regarding the Building Safety Levy, please get in touch using the contact details below.