Building Safety Levy takes effect as housebuilders warn of hits to viability and pipeline

# What changed on 1 October 2026

October 2026. It applies to most new-build residential developments and is designed to make the housebuilding sector contribute to the costs of remediating unsafe buildings. Rather than being collected through planning, the levy is applied via the building control process and the Building Safety Regulator gateway.

# How the levy is calculated and collected

Charges are based on a development's gross internal floor area and local property values. Local councils are the primary collecting authorities. Examples of published rates show significant variation by area:

• Royal Borough of Kensington and Chelsea: £50.17/sq m (previously developed land), £100.35/sq m (previously undeveloped land).
• Westminster: £49.01/sq m and £98.01/sq m respectively.
• Hammersmith & Fulham: £45.94/sq m and £91.87/sq m respectively.
• Outside London, higher rates include Epsom and Ewell at £56.62/sq m (previously undeveloped) and Cambridge at £50.87/sq m.

# Immediate industry effects

Because the levy is collected at the building control stage, developments that already hold planning consent may still incur the charge when they pass through Gateway 2. That creates a funding gap for schemes that were priced on the assumption the levy would not apply.

The levy adds to an existing stack of charges on residential developers and comes at a time when planning approvals have fallen. The Home Builders Federation reported that the past 12 months saw the lowest level of planning approvals for more than a decade.

# Legal and commercial concerns

Construction law firms warn of unintended consequences. James Morris, a construction litigation partner, said the main worry is whether another cost on residential development arrives at a time when the sector already faces multiple pressures. He questioned whether the levy can fund remediation without undermining housing delivery.

Andrew McEwan, a commercial real estate partner, warned the levy's effectiveness depends on raising intended revenues without constraining the development pipeline. He noted risks to schemes with planning consent but without Gateway 2 approval: those projects may need to revisit viability assessments. Schemes previously refused at Gateway 2 might also face the levy if resubmitted.

If projects are delayed or cease to be financially viable, development activity will shrink and the total revenue the levy can generate will fall.

# Cladding remediation context

# Practical implications for developers and councils

Developers should recheck viability for projects that have not yet passed Gateway 2 and build the levy into budgets and cashflow models. Councils need systems to collect payments and to communicate rates clearly to avoid late surprises. Lenders and equity partners will want clarity on whether schemes will face the levy before releasing funds.

# Bottom line

The levy introduces a predictable funding mechanism for remediation costs but also imposes a new financial layer on new-build housing. The main risk is that added cost pressures will slow or stop schemes, eroding both housing delivery and the levy's revenue base.