Building Safety Levy – our response to the latest consultation

The Department for Levelling Up, Housing and Communities recently consulted on the Building Safety Levy, seeking views on its design and implementation. The levy was announced in 2021 as part of wider measures to help fund the remediation of unsafe cladding.

Initially, the levy was intended to apply to the development of ‘higher-risk’ buildings – buildings with at least two residential units, care homes or hospitals which are at least 18 metres in height or have at least seven storeys. However, last year the government announced that the scope of the levy would be expanded to cover all residential developments.

The NHF supports the broad policy intent of the levy to contribute to the costs of making all buildings safe, however we are concerned that the levy, without appropriate safeguards, could have a negative impact on the supply of affordable homes.

To minimise the impact the Building Safety Levy could have on the supply of affordable homes, we recommend the following measures to the government in our response:

• The transitional arrangements are structured so that the Building Safety Levy is not payable in relation to developments that had been granted planning permission before the Building Safety Levy is introduced.

• The following developers should be excluded from paying the levy:
  • Non-profit registered providers of social housing.
  • Companies that are wholly owned by non-profit registered providers of social housing.

This would be consistent with the exclusion afforded to such entities in relation to the Residential Property Developer Tax.

• The term ‘Client’ must be tightly defined, so that there can be no dispute as to the identity of the ‘Client’ in any given housing development.

• Homes developed by limited liability partnerships in which a non-profit registered provide of social housing (or its wholly-owned subsidiary) is a member should benefit from a reduced rate of levy, proportionate to the registered provider’s share of the limited liability partnership’s profits.

• Affordable housing (as defined by the National Planning Policy Framework) should be excluded from the Building Safety Levy, including affordable homes contributed under planning obligations. Supported housing should also be excluded.

• There should be a mechanism whereby the Building Safety Levy can be clawed-back in the event that any part of a building in respect of which the levy was paid is subsequently transferred to a registered provider of social housing and used to provide affordable homes.