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5. HBF explains... the Building Safety Levy

Last updated: 20 October 2025

What is the Building Safety Levy?

The Building Safety Levy is a tax on new residential buildings that will come into force in October 2026. The Levy was legislated for under the 2022 Building Safety Act, and its implementation was delayed for 12 months by the current government.

The Levy is intended to collect £3.4 billion from UK home builders for building-safety related purposes. It will be charged before completion of building work and occupation of buildings, and collected by local authorities.

Two levy rates have been published for each local authority in England, localised according to local house prices. Each local authority area has a brownfield development rate, expressed in £/m2 terms for gross internal floor area, and a corresponding greenfield rate, which is twice as much per square metre.

What commitments has the industry made on building safety?

HBF has a longstanding and ongoing commitment to the principle that leaseholders should not be required to pay for the remediation requirements that have been largely caused by decades of failure in the building regulations regime, and owing to the flaws with product testing and accreditation.

To date, UK home builders have committed:

• £2bn through an additional four percentage point surcharge on Corporation Tax introduced in 2022, meaning that larger UK-based residential developers (but not overseas developers) pay Corporation Tax at 29% rather than 25%;
• £3.3bn through a unique voluntary self-remediation pledge which commits over 50 UK Home builders to complete the remediation of thousands of buildings developed over 30 years, even where they complied with the building regulations of the day.
• £700 million in reimbursements to government funds for buildings that signatory builders have developed, which had already been remediated with support from government schemes.

Therefore, before taking the Building Safety Levy into account, the industry has already made building safety commitments worth around £6bn.

What is HBF’s position on the Building Safety Levy?

HBF opposes this further tax on an industry and is calling for it to be suspended. As noted by the Public Accounts Committee in its inquiry into remediation, it is unfair that one sector is expected to fund more than £9.4bn worth of remediation costs without extracting any commitments from other sectors with responsibility for remediation, such as product manufacturers and overseas developers.

The necessity of the tax is also in question, and it will have a significant negative impact on housing supply of all tenures, as outlined below.

Is the Building Safety Levy necessary?

The Ministry of Housing, Communities and Local Government (MHCLG) has recently revised downward its assumptions about the proportion of buildings requiring remediation by 40% (Building Safety Remediation data releases). At the same, the amount of money the government is seeking to collect through the Levy has increased from £3bn to £3.4bn since 2023, without explanation.

Therefore, while the original estimate suggested that £3bn would need to support the remediation of 7,500 buildings, MHCLG is now suggesting that £3.4bn is needed to fund works on fewer than 3,700 11-18m buildings.

The government’s estimate of buildings requiring remediation also includes many which are already due to be voluntarily remediated at the expense of developers under the terms of self-remediation commitments made in 2023.

£2.6bn of the existing Building Safety Fund also remains unallocated. For these reasons, the industry does not believe the Levy is necessary.

At a minimum, a full impact assessment needs to be conducted to properly understand the necessity of the Levy and the potential impact on housing supply. No such impact assessment has taken place.

What will be the impact of the Building Safety Levy on housing supply?

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.

In the context of an ever-growing range of viability pressures resulting from additional policy costs, taxes and levies and a subdued housing market, we expect the long-term consequences of the Building Safety Levy to be significant for the supply of new homes in England.

The Levy will also reduce Affordable Housing supply, as it will transfer funding away from Section 106 contributions (which fund tens of thousands of affordable homes every year) and towards central government. WPI’s central estimate in 2022 is that around 70,000 affordable homes will be lost over the ten years of the Levy.

HBF’s other concerns include:

• Design of the Levy: Due to the stance of the previous government and its general approach to development, it seems likely that the Levy was devised and designed to reduce housing supply, particularly in parts of the country with the greatest housing affordability pressures.
• Reduced supply of high-rise buildings: As the Levy will be levied based on floor area, it will further penalise the development of high-rise buildings, as well as dampening effective demand from the first-time buyer market, which tends to buy flats in greater numbers. Therefore, the Levy will have a particularly detrimental impact on supply in London and major cities.
• Impact on SME home builders: It is unfair that the Levy will be paid by many companies who have never built anything higher than a two-storey house, including SMEs who are already struggling against the weight of a burgeoning tax and policy burden. The Levy will also be due at the point of the first home being completed, when the cash flow of SMEs is most constrained.

If you have any questions about the Building Safety Levy, contact our Policy team at policy@hbf.co.uk

Find out more about Building Safety

View the latest HBF correspondence with Government and recent activity

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