Building Safety Levy – the clock is ticking for affected developments

Scope and application

The Building Safety Levy (England) Regulations 2025 (Regulations) impose a Building Safety Levy (BSL) on the development of certain residential buildings in England.

The obligation to pay BSL is triggered by the relevant building control application.

Where the building work constitutes a major residential development or forms part of a wider development that is major residential development (for example, a mixed residential and commercial development permitted under the same planning consent), BSL is payable, subject to certain exemptions.

Building control applications that will trigger the obligation to pay BSL are: applications for approval with full plans, initial notices, and applications for higher risk buildings (HRBs) made on or after 1 October 2026 and variation applications relating to such applications.

Applications submitted prior to 1 October 2026 and variation applications or commencement notices given on or after that date but relating to an original application made before 1 October 2026 are not subject to BSL.

Major residential development for this purpose is defined as any development resulting in at least 10 dwellings or 30 bedspaces in purpose built student accommodation (PBSA). Where the development relates to a building that already contains dwellings or bedspaces, the threshold is met only if the number of dwellings or bedspaces is increased by 10 or 30, respectively.

Anti-avoidance provisions

Guidance accompanying the Regulations highlights anti-avoidance provisions.

Where planning consent is granted for 10 dwellings, submitting multiple building control applications each for fewer than 10 dwellings will not avoid liability for BSL. Similarly, where there are multiple clients for the same development, they will be treated collectively.

Planning consent may be granted for a development to be carried out in phases. While applications for building control approval may be made separately for each phase, together they form part of a wider development permitted by the same planning consent. Individual phases may fall below the threshold; however, BSL will be payable if the threshold is met across all phases.

Calculation of BSL

BSL is calculated by applying a formula set out in the Regulations, which requires chargeable residential accommodation floorspace and communal floorspace for residents to be calculated and added together. The total is then multiplied by an “area rate” per square metre.

Area rate:

The applicable area rate depends on the relevant local authority for the property and whether the site is greenfield or previously developed; it is then weighted using average house prices. Local authority areas with the highest average house prices have the highest levy rates and vice versa. Area rates are set out in Schedule 3 of the Regulations.

The Regulations specify that land is ‘previously developed’ if the building work to which the application relates is permitted under the Town and Country Planning (General Permitted Development) (England) Order 2015 or immediately before the earlier of (a) the date planning consent was granted or (b) the authorised development was begun, at least 75% of land within the planning consent redline was previously developed – meaning that, on or after 1 July 1948, a building is or was situated on it.

Land is not previously developed if:

• a building on it is used for agriculture or forestry or the most recent building was used for one of those purposes; or
• land has been developed for minerals extraction or waste disposal by landfill.

Chargeable residential accommodation floorspace:  

The residential floorspace of dwellings and PBSA but excluding exempt floorspace (see below).

Chargeable floorspace for residents:  

The residential floorspace of dwellings and PBSA but excluding exempt floorspace (see below).

• Communal floorspace shared only by dwellings comprising chargeable residential accommodation floorspace is charged at 100%.
• Communal floorspace shared by dwellings comprising chargeable residential accommodation floorspace and dwellings or other premises comprising exempt floorspace is charged on a percentage basis, calculated by applying the following formula:

P = U/U+O x 100, where:

P = the percentage

U = the area of chargeable residential accommodation floorspace

O = the area of exempt floorspace

Communal floorspace for residents does not include chargeable residential accommodation floorspace or areas available for use by the general public. It is only chargeable where it is either solely shared by dwellings comprising chargeable residential accommodation floorspace or shared by such dwellings with other premises.

Exemptions

Wholly exempt buildings

Buildings designed or adapted to be used primarily as school accommodation; a care home; a secure residential institution or other premises for the supervision and rehabilitation of persons charged with or convicted of offences; a hospital; accommodation for victims of domestic abuse; a children’s home; a residential family centre or supported accommodation for children; a monastery, nunnery, seminary, or similar establishment; an almshouse; or temporary accommodation for homeless people.

It is notable that buildings designed or adapted to be used primarily as hotels and hostels are also exempt.

Exempt applicants

If the client (or all of the clients if there is more than one) named in the building control application is a non-profit registered provider of social housing or a wholly owned subsidiary of it, the application is exempt and BSL is not payable.

Exempt floorspace

Floorspace within social housing (subject to conditions – see below); supported housing (accommodation provided by specified bodies where the occupier receives care, support, or supervision); accommodation that is the type found in a wholly exempt building; and non-residential floorspace is exempt. If a building comprises wholly exempt floorspace – for example, a mix of social housing (as referred to below) and commercial – no BSL will be payable.

Social housing

Social housing floorspace is exempt floorspace if one of four specified conditions are satisfied, briefly: (1) certain dwellings let by registered providers of social housing on specified tenancies; (2) where specified shared ownership provisions apply; (3) certain social housing let by non-registered providers of social housing at below market rent where a planning obligation applies; and (4) social housing to be sold for no more than 70% of market value where a planning obligation applies.

Timing for payment of BSL

The local authority must determine the amount of BSL payable within a specified period, give notice of it (a levy liability notice) to the client, and provide a certificate confirming receipt of payment.

The BSL must be paid on or before the earlier of (a) the completion notice date and (b) the first date of occupation of the relevant residential building.

The completion notice date will depend on the type of building control application.

Example calculation for a mixed use development of a 5,000-square-metre (sqm) building within Westminster

Step one: Identify floorspace components

Step two: Calculate total chargeable floorspace

Step three: Apply area rate (Westminster)

Implication for developers

BSL will need to be factored into the assessment of development costs and may affect the viability of a scheme. The Home Builders Federation expressed concerns as to the impact of BSL, commenting that “the Building Safety Levy represents a major increase in the cost of delivering new homes, which will have a stark impact on viabilities for new sites, with growing evidence that it will make development financially unviable in some parts of the country – adding £3,000 per plot on average.”

Increased costs will not be limited to the levy itself but will also include additional administrative costs for compiling and maintaining relevant information for the building control applications.

The relevant authorities may carry out spot checks during certain periods to assess the accuracy of BSL information provided. It is therefore important to maintain good records, including for verification of measured areas. Where a spot check reveals that the information provided was inaccurate, the collecting authority may substitute corrected information for the purposes of determining the levy liability amount, potentially resulting in a higher levy charge.

The client named in the building control application (any person for whom a project is carried out) is the entity obliged to pay BSL where it is due – typically the developer and/or the landowner. There may be multiple clients. Developers need to consider whether a contribution should be sought from other parties to the transaction or whether the cost should be factored into pricing.

Area rates will be a factor in site selection – particularly for sites that have not been pre-developed or are within a local authority with a higher rate, resulting in the highest BSL costs.

Late or non-payment of BSL does not incur interest; however, building control completion certificates may be withheld until full payment is made. This will prevent completion and occupation of the development until BSL is paid in full – acting as a financial pre-condition to completion and impacting triggers for practical completion and longstop dates.

Developers should urgently review current projects and consider whether a building control application can be submitted before 1 October 2026, taking into account any knock-on effects, such as gateway requirements where the development is an HRB. Consideration should be given to accelerating works on the ground to meet this deadline.

Client Alert 2026-044