A consultation for the planned Building Safety Levy, intended to spark feedback on the proposed structure and enforcement of the charge, has closed. In this article, Harwood discusses some of the key details within the proposal
The objective of the Building Safety Levy was initially announced in 2021 and estimated to generate £3 billion over 10 years, is to prevent the public and leaseholders being charged for the remediation of safety deficiencies in properties, such as replacing unsafe cladding. The proposal suggests that developers will instead be responsible for paying the levy as part of the building control process.
The consultation, undertaken by the Department for Levelling Up, Housing and Communities (DLUHC), was to gather input on the design of the new levy, informing the details of its final form. The government invited feedback from various agencies, including the construction sector, property sector, and charities that support building safety.
Proposed exceptions from the Building Safety Levy
Certain buildings, including NHS buildings, children’s institutions, refuges and military facilities will be exempt from the levy. For now, it is unknown if the levy will apply to the rented sector, student accommodation and senior citizens’ housing.
The government proposes that smaller developments should be exempt from the levy to help support small businesses. The DLUHC has invited companies to contribute what they believe will be the impact of the levy on how they do business.
Conversions, home upgrades and refurbishments ought to be excluded from the levy, say ministers, arguing that imposing it would discourage people from improving properties. In addition, the consultation paper suggests that there could be a discounted rate for developments that provide affordable housing.
A varied charge to developers
The new charge to developers will not be a fixed payment per project, but rather calculated on the intended development’s size and location.
The government proposes the new charge will be calculated based on local house prices, and whether the construction area is a brownfield or a greenfield plot. The actual amount of the charge has yet to be stated and is unlikely to be proposed before the input from this consultation has been considered.
How will the Levy be collected?
Under the proposed plans, local councils will collect the proposed charge from developers. Already involved in and familiar with the local building control system, local authorities have proven ability, knowledge, and the necessary relationships to do so best, says the DLUHC.
The idea is that local authorities have systems already in place for the collection of fees, so the practice of collecting this new levy in their area should fit their structure. How much revenue will be given to the collection service or how much will be used for administration isn’t yet clear.
The changes brought about by the Building Safety Levy will have a major impact on existing construction processes
The new levy comes into force through the Building Safety Act, the provisions of which represent the most significant changes to the construction sector since the introduction of building regulations. The changes brought about will have a major impact on the entire existing construction process.
Approved Inspectors currently handle most high-rise residential structures. The NHBC oversees roughly 40 per cent and 30 per cent is assessed by local councils. However, there is growing concern about present capacity and where there will be enough trained staff in the sector to work on new developments, particularly in the field of building control.
Industry leaders in various sectors will naturally be considering whether this new levy, in addition to the stipulations of the Building Safety Act, might detract people from joining the building control profession. Were this reduction in new building control professionals to transpire, it could further compound the pressures that the Building Safety Act and any associated charges might bring.
Reform is needed to protect building occupants
Although there has been some controversy around the levy, many of the UK’s largest housebuilders agree that reform is vital to protect buildings and their occupants.
Commenting on the levy, Ben Cheeseman, commercial director at Harwood, said: “Whilst the consultation process remains at an early stage with much detail still to be addressed, at Harwood, we encourage any reform that will ensure safety hazards in buildings are eliminated.
“We are committed to providing our clients with any support they might need about the proposed changes or how they might impact any future projects, including implementation dates and transitional arrangements.”
The consultation ended on 7 February 2023. Although there is currently no fixed date for when the levy will take effect, it is generally presumed that it will begin this year.
