The Government is pushing ahead with a new tax on residential development, which includes purpose-built student accommodation (PBSA). The Regulations come into force on 1 October 2026. Therefore, levy rates need to be considered when assessing the viability of future developments where applications for building control approval are made on or after 1 October 2026.
Published 3 December 2025
The Government is pushing ahead with a new tax on residential development, which includes purpose-built student accommodation (PBSA). With less than a year to go until the implementation of the new levy, now is the time to prepare and consider the impact on future projects.
The Building Safety Levy (England) Regulations 2025 (Regulations) were made on 19 November 2025 and will come into force on 1 October 2026. Helpfully, to assist the industry as it prepares for the implementation of the levy, the government has also published guidance to explain how the Building Safety Levy will operate in practice.
The levy applies to developments in England, with Scotland planning to implement its own levy, Scottish Building Safety Levy and what it means for residential development. It has been recently announced that the Scottish Government will delay the implementation of its levy until 1 April 2028 to ensure appropriate lead in times with indicative rates being set in June 2026, after the Scottish Parliament election. It is not clear at this stage whether Wales intends to implement a similar levy.
With less than a year left until the levy in England comes into force, understanding the detail of the levy and the impact on future developments is key.
Will the levy apply to building control applications submitted before 1 October 2026?
There are no transitional provisions. Therefore, an application for building control approval made on or after 1 October 2026 relating to the provision of one or more dwellings and or one or more PBSA bedspaces will be subject to the levy, save where an exemption applies.
However, the Regulations confirm that the levy will not apply in relation to any building control application for the provision of one or more dwellings and/or one or more PBSA bedspaces that has been made before the Regulations come into force. The Regulations also state that the levy will not apply to a variation of an existing application made after 1 October 2026 provided the variation application relates to an original application which was made before the commencement date. Therefore, developers may be encouraged to consider applying for building control approval before 1 October 2026 where appropriate.
What are the levy charging conditions?
Where work meets all 3 levy charging conditions, the building safety levy charge will be incurred. The charging conditions are as follows:
1. Major residential development: The works must constitute, or form part of, a major residential development. This is a development of 10 new dwellings or more or, for PBSA, 30 new bedspaces or more.
2. Residential: The works must result in the creation of new residential floorspace in new or existing buildings comprising:
o dwellings (other than social housing, supported housing or other exempt uses);
o PBSA; and
o communal areas which are intended to be used by chargeable dwellings or PBSA (in whole or in part).
3. Client not an exempt person: The client is not an exempt person as defined in the Regulations. Non-profit registered providers of social housing are exempt regardless of whether the intended use of the buildings is otherwise classed as exempt.
Certain residential developments are excluded from the levy and are set out in Schedule 1 of the Regulations. This includes care homes, school accommodation, hospitals, hotels and prisons. These excluded developments are not required to include levy information as part of the application for building control approval. However, where an application for building control approval for works relate to the provision of social housing and supported housing, the application must evidence the exemptions at commencement stage.
What are the levy rates?
The levy will be collected by the local authority in which the development is situated with levy revenues set to be transferred to central government to spend on building safety. The government has set levy rates for each local authority area to be charged per square metre on chargeable floor space, which includes communal space for residents. Discounted rates apply to developments being constructed on previously developed land provided at least 75% of the relevant land has previously been developed. This is discussed further in our earlier article: Building Safety Levy rates confirmed as the government outlines plans for implementation.
The Regulations amend current regulation for the submission of building control applications to include various building safety levy information to enable to collecting authority to calculate the applicable levy. Subject to receipt of that information the collecting authority will determine the levy amount within 5 weeks of receipt and then issue a levy liability notice stating the levy charge.
The levy charge must be paid on or before the earlier of the date the applicable completion notice is given (which depends on whether the building control application is by deposit of full plans, an initial notice or a gateway 2 application for a HRB), and the first date of occupation of the relevant residential accommodation.
If the levy has not been paid, then the completion certificate cannot be issued or final certificate approved by the building control authority.
Will this impact housebuilding targets?
The levy’s impact on the government’s ambitious housebuilding targets remains uncertain. Concerns have been raised with the HBF recently stating that the 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”.
What next?
The Regulations come into force on 1 October 2026. Therefore, levy rates need to be considered when assessing the viability of future developments where applications for building control approval are made on or after 1 October 2026.