The Building Safety Levy

Update

 The government has introduced further amendments to the Building Safety Levy (England) Regulations 2025 ("2025 Regulations") via the Building Safety Levy (Amendment) (England) Regulations 2026 ("2026 Regulations") to ensure the Building Safety Levy operates as intended when introduced on 1 October 2026.

Whilst the 2026 Regulations make corrective amendments (among other changes), one notable change concerns what constitutes “previously developed” land under Regulation 21 of the 2025 Regulations. Previously developed land is subject to a 50% reduction in Levy rates as discussed in more detail in our Insight.

Prior to the 2026 Regulations, land was defined as "previously developed" if on or after 1 July 1948, a building had been situated on it (whether it is there now or not). This was subject to specific exclusions for agricultural, forestry, minerals extraction or landfill purposes. If an exclusion applied the land would not be classified as previously developed so the full Levy rate would apply.

If a building was situated on the land after 1 July 1948 but an exclusion also potentially applies, the question arises: which fact takes priority and cancels out the other? In other words, does the exclusion cancel out the fact that a building stood on the land?

To answer this question, the land is assessed at a certain point in time called “the relevant date”. The relevant date is defined as the earlier of (i) the date on which the relevant planning permission was granted, or (ii) the date on which development authorised by that permission was begun.

The 2026 Regulations amend the definition by introducing four key changes:

• Wholly underground buildings are excluded from the definition.
• Unlawful operations carried out on land mean it is not "previously developed" (with "lawful" bearing the same meaning as in section 191 of the Town and Country Planning Act 1990).
• Underground parts of buildings are excluded from the 75% calculation (for the land to qualify for the previously developed land discount, only 75% of the land needs to be classed as previously developed).
• "Building" is redefined to mean any permanent building and any other “permanent man-made structure or erection”, expressly including load-bearing surfaces and plant and machinery. (Previously, the definition of "Building" took a broader meaning from section 336 of the Town and Country Planning Act 1990, to include any structure or erection and any part of a building but excluding plant or machinery.

Those undertaking due diligence on sites previously meeting the 2025 Regulations definition should reassess their position under the amended definition, as losing the 50% discount will have material cost implications.

The Levy

On 10 July 2025, the government published the draft Building Safety Levy (England) Regulations 2025 (the “Regulations”) and its accompanying guidance which will come into effect on 1 October 2026 (having been delayed from the original date of this coming Autumn). The Regulations proposes a building safety levy (the “Levy”) on residential developers.

The Levy is being introduced to raise additional income from residential developers in order to contribute towards the costs of remediating building defects across England. Currently, the government is seeking to raise £3.4 billion through the introduction of this Levy.

This Insight explores the Regulations and its accompanying guidance in further detail and sets out a high-level overview of the key points that developers should be aware of. It should also be noted that these Regulations only apply to England.

Who/what does the Levy apply to?

The Regulations’ wide definitions are designed to capture a wide variety of residential developments.

The Levy is to apply to developments which will produce 10 or more dwellings or a minimum of 30 new bedspaces in purpose built student accommodation. Additionally, the Regulations also seek to capture developers who are seeking to change the use of existing sites into a residential development (i.e., converting a block of offices into residential flats).

However, crucially for developers, the accompanying guidance states that if the building regulations application is submitted prior to the date the Levy is due to be introduced, then the developer will not need to pay the Levy. We may therefore see a rush from developers in the lead up to 1 October 2026, in order to save projects incurring additional time and cost.

Exemptions

There are two exemptions set out within the Regulations with the first exemption being the more narrowly defined:

1. Developer specific - if the developer is a non-profit registered provider of social housing then it is exempt from having to pay a Levy. This is the case no matter the type of residential development that is proposed by that developer; or
2. Building specific - Schedule 1 of the Regulations sets out the list of buildings which are exempt from the Levy. These include, but are not limited to, school accommodation, hotels and hostels, care homes and children’s homes.

How much is the Levy?

The total Levy payable will be worked out by taking the total gross internal area (in square metres) of both the (i) residential floor space and (ii) communal floor space and then multiplying this by the applicable local authority rate. Each local authority has its own rates and if the development is on land which has been previously developed, the rate is half that of the rate for land which has not been previously developed. For example, the rates for a development on previously developed land in Birmingham is £14.62 (compared with £29.23 for undeveloped land).

When is the Levy paid?

Once the developer has submitted its building regulations application, it has triggered the requirement to pay the Levy. Local authorities can withhold certificates at completion until the relevant Levy has been paid. Once the Levy has been paid by the developer, the local authority is required to issue a certificate within two weeks confirming that the Levy has been paid – this will form an important audit trail for compliance, particularly on the sale of the property.

Local authorities will also be required to carry out spot checks to assess whether the amount the developer paid for the Levy and/or information provided to the authorities was accurate. A revised determination notice can be issued if the local authority deems the notice to be inaccurate, thus adding additional delays for completion of a project.