The Building Safety Levy (BSL) is about to become a significant new consideration for residential developers in England. After several years of consultation and legislative development following the Grenfell Tower tragedy, the government laid the Building Safety Levy (England) Regulations 2025 and published detailed guidance explaining how the levy will operate in practice. The levy forms part of a broader package of measures aimed at ensuring that the costs of remediating historical building safety defects are not borne solely by leaseholders and taxpayers.

For developers, the BSL is much more than a new regulatory requirement. It is a material development cost that will need to be factored into land acquisition, viability assessments, project financing and development appraisals. With the levy due to come into force on 1 October 2026, developers need understand how it works and what it could mean for future schemes.

What is the Building Safety Levy?

The BSL is a charge on certain residential developments in England and sits within the building control regime (as opposed to the planning system). It was introduced under the Building Safety Act 2022 and is intended to raise funds to contribute towards the remediation of historical building safety defects across the country. The government has estimated that the levy will raise approximately £3.4 billion over a 10-year period.

Unlike many aspects of the post-Grenfell building safety regime, the levy is not limited to higher-risk buildings. Instead, it applies more broadly to qualifying residential developments regardless of building height. This means that low-rise housebuilding schemes can be just as affected as high-rise residential projects.

What developments are caught?

BSL applies to “major residential developments” and residential student accommodation that meet specific thresholds. Broadly, these are developments that create:

• at least 10 residential dwellings; or
• at least 30 bedspaces in purpose-built student accommodation (PBSA).

The levy can apply to:

• new residential buildings;
• existing buildings that are converted to include residential floorspace where none previously existed; or
• existing buildings where the amount of residential floorspace is increased.

Importantly, the levy is linked to the wider development rather than simply the individual building control application. Developers should not assume that a large development can avoid it by being divided into smaller building control submissions.

The levy applies to residential floorspace, which includes ordinary residential dwellings, PBSA and communal areas intended for residents.

Are there any exemptions?

Yes. The guidance provides a number of exemptions designed to avoid charging forms of development delivering a wider community benefit. These include:

• Social housing
• Supported housing
• Care homes
• Hospital accommodation
• School accommodation
• Temporary accommodation for homeless people and domestic abuse refugees
• Hotels, hostels and other specified forms of communal accommodation.

Developers seeking to rely on an exemption should ensure that they understand the detailed eligibility requirements and documentary evidence needed to support their position. The guidance contains specific provisions addressing how exemptions operate in practice.

How is the levy calculated?

The levy is calculated by reference to:

1. the amount of chargeable residential floorspace; and
2. the applicable local authority levy rate.

Rates are set on a pounds-per-square-metre basis and vary across England. The government has established different rates for each local authority area (set out in the guidance), reflecting local housing values and market conditions.

For developments on qualifying previously developed land (which, subject to certain specified exclusions, is land which either has a building on it, or had a building on it at any point on or after 1 July 1948), commonly referred to as brownfield land, a discounted rate applies. The guidance confirms that the brownfield levy rate is 50 percent of the standard levy rate, recognising the higher costs that often accompany brownfield redevelopment.

As a result, the levy cost for a scheme will depend on three principal factors:

• location;
• amount of chargeable residential floorspace; and 
• whether the site qualifies as previously developed land.

This means that otherwise similar residential schemes may face very different levy liabilities depending on where they are located and whether they are brownfield or greenfield developments.

When is the levy calculated and payable?

Although levy liability is assessed through the building control process, payment is generally not required at the outset of construction.

Following the issue of a commencement notice (including the requisite levy information) under the relevant building control regime, local authorities will need to calculate how much levy is due. Once established, Local authorities will issue either a notice of no charge, or a “levy liability notice” if a levy charge is due. 

If they do not agree with the amount of the levy, developers may request a review which initiates a structured process set out in the regulations and guidance. If the developer is dissatisfied with the outcome of the review, or if the local authority fails to notify them of the decision in time, they may appeal to the First-Tier Tribunal. 

The levy becomes due on the earlier of:

• the completion notice date for the works; or
• the first occupation of the building.

Once the full liability amount has been received by the collecting authority at the relevant time a “levy payment certificate” will be issued confirming receipt.

Failure to pay can have serious practical consequences. The guidance and accompanying regulations make clear that non-payment may prevent the issuance of the relevant completion certificate or final certificate. Without those certificates, occupation and handover could be delayed.

In other words, the levy is not simply another development tax. It sits directly on the project’s completion critical path.

When does it come into force?

The Building Safety Levy comes into force on 1 October 2026. Ongoing developments where a building control application was submitted prior to 1 October 2026 are not subject to the new levy, nor are subsequent variations or commencement notices connected to such original applications, even if those are submitted after the commencement date.

The regulations were originally expected to take effect earlier, but implementation was deferred to provide additional time for developers, local authorities and building control bodies to prepare. The government subsequently published updated guidance in July 2026 ahead of commencement.

As a result, developers currently progressing schemes should carefully assess whether planned building control submissions will fall before or after the commencement date.

What should developers be considering now?

Review scheme viability

Developers should incorporate levy liabilities into financial appraisals and land bids now. For some schemes, particularly in higher-value local authority areas, the additional cost could materially affect viability.

Assess pipeline projects

Particular attention should be paid to schemes that are approaching building control submission. Timing will significantly influence whether the levy applies.

Consider potential exemptions 

If any exemptions do apply, this could have a significant impact on development costs. This may apply particularly for developments involving social and supported housing, and other forms of development with wider community benefit.

Consider brownfield qualification

The 50 percent brownfield discount could produce substantial savings on larger schemes. Developers should review whether sites are capable of meeting the definition of previously developed land and ensure that supporting evidence is assembled at an early stage.

Update development documentation

Project teams should ensure that responsibility for levy compliance, information provision and payment is clearly addressed in development agreements, funding documents, consultant appointments and construction contracts. The levy creates a new compliance process that will require co-ordination across the development team.

Protect programme certainty

Because unpaid levy liabilities can delay completion certification, developers should treat the levy as a programme-critical issue rather than a late-stage accounting exercise. Appropriate monitoring and payment procedures should be established well before practical completion.

Looking ahead

The Building Safety Levy represents the latest step in the government’s continuing programme of building safety reform. While its objective of funding remediation may be widely understood, for developers it introduces a new cost layer at a time when the sector is already navigating gateway approvals, increased construction costs and wider viability pressures. 

Whilst industry bodies are urging a further delay to the introduction of the levy, to date there appears to be no movement from the government on this front. With commencement now imminent, developers should ensure that exposure to the Building Safety Levy is understood across their development pipeline and reflected in commercial decision-making.