Building Safety Levy – another tax on housebuilders

From 1 October 2026, most residential developments of 10 or more dwellings will be subject to the Building Safety Levy.

The levy is intended to fund the remediation of unsafe buildings with cladding and other defects. It will apply to new residential developments and will be triggered when a building regulations application is submitted. Affordable housing and certain other categories will be exempt.

Depending on location, the levy could add £20 to £60 per m², while developments in Oxfordshire and the Home Counties will typically fall within £30 to £40 per m². In most other parts of the country, the levy will range between £20 and £30 per m².

Combined with existing obligations such as RPDT, CIL and Section 106 agreements, the levy introduces another cost that developers will need to factor into scheme viability.

For some projects, particularly in lower-value areas, this additional cost may make previously viable schemes more difficult to deliver.

Increased development costs

The levy introduces a new upfront cost based on either the unit numbers or floorspace. When combined with existing development charges, it will place additional pressure on margins.

Higher costs are likely to make marginal sites unviable, particularly in areas where sales values cannot absorb the increased development costs.

Pressure on land values

Housebuilders often respond to increases in development costs by reducing the price they are willing to pay for land.

However, much development land will already have been purchased prior to the announcement of the levy, meaning this adjustment may not be possible. Landowners may also resist reductions in land value, which could slow or stall transactions currently underway and limit the number of new sites coming forward.

Reduced housing supply

As viability pressure increases, developers may submit fewer residential planning applications or delay projects.

This risk may be particularly significant for SME housebuilders, who often operate with tighter margins. Over time, this could result in fewer schemes progressing and reduced housing delivery, potentially conflicting with government housing targets.

Disproportionate regional impact

The levy may be absorbed more easily in higher-value areas such as London and the South East.

In lower-value areas, including parts of the North and Midlands, even a relatively modest levy could make some schemes unviable. This may widen regional disparities in housing delivery.

Implications for affordable housing

Where scheme viability is reduced, developers may seek to renegotiate affordable housing contributions during the planning process.

This may place additional pressure on the delivery of affordable housing and could increase acquisition costs for registered providers purchasing developer-built affordable units.

Can the levy be avoided?

For open market housing, including student accommodation and accommodation for elderly persons, the only way to avoid the levy is for a Building Regulations application to be submitted before 1 October

Developers with projects expected to come forward during 2026 may therefore wish to progress technical design drawings and Building Regulations submissions well in advance of the deadline.

It is important to note that incomplete applications may be refused, and any resubmission after 1 October 2026 will trigger payment of the levy.

Act Now

With the introduction of the levy approaching, we anticipate a significant increase in demand for technical design services as developers look to secure Building Regulations approval before the deadline.

If you have a project expected to come forward in 2026, early preparation will be essential.

The team at WWA are here to help. For more information or to discuss your project, please contact Mark Slater on 0208 941 5161 (London) or Johnathan Headland on 0123 552 3139 (Oxford)