It is expected that from 1 October 2026, developers of certain residential developments will be required to pay the new Building Safety Levy as an additional project cost. Below we briefly summarise the answers to key questions such as: what is the levy? What developments will be subject to the levy? And what can residential developers do to prepare?

What is the Building Safety Levy?

The Building Safety Levy (BSL) is described in the Building Safety Act 2022 as "a levy for the purpose of meeting any building safety expenditure". This is one of the measures resulting from the UK government’s response to the Grenfell Tower Fire. It has been estimated that the BSL will generate an additional £3.4bn over a period of ten years (or more) in addition to the £5.1bn already committed by the UK government.

But what does this really mean for residential developments in the UK?

Which developments will be subject to the BSL?

The BSL will apply to building control applications for developments in England which meet three specific conditions:

1. A development for the creation of residential floorspace – whether through the construction of a new building or an addition to an existing building.
   • This will apply where new residential floorspace is created by a change of use of a building, as well as when building an extension to an existing building.
   • It includes ordinary residential dwellings, purpose-built student accommodation and communal areas for residents.
   • It does not include social or supported housing or other exempted accommodation such as school accommodation, care homes, hospitals and hotels (a detailed list of all exempted accommodation can be found in the Building Safety Levy (England) Regulations (the BSL Regs)). Where a development would result in the creation of both included and excluded accommodation, the in-scope residential floorspace will remain subject to the BSL;
2. The works must constitute or form part of a major residential development – being a development resulting in the provision of at least 10 dwellings or at least 30 bed spaces in purpose-built student accommodation; and
3. The client is not exempt – exempt persons are non-profit registered providers of social housing (and their wholly owned subsidiaries).

All three conditions must be met in order for the BSL to apply and the BSL only applies to developments in England. If a development spans the border between England and Wales or Scotland, only those buildings which are wholly situated within England will be subject the levy charge.

When will the BSL apply?

The BSL is expected to apply to building control applications made on or after 1 October 2026. For this purpose, building control applications are:

• applications for building control approval with full plans;
• applications for building control approval in respect of higher-risk buildings (made to the Building Safety Regulator);
• initial notices; and
• subsequent updates to these applications/notices.

As currently drafted, the BSL will not retrospectively apply to applications properly submitted prior to 1^st October 2026.

Who is liable to pay what, to whom and when?

Who pays?

The "named client" is the party liable to pay the levy. Who is the "named client" will depend on the type of application being made, but broadly it will be the person or organisation for whom the works are carried out. In a major development, this is likely to be the property developer.

What needs to be paid?

What will need to be paid will be subject to detailed calculations currently set out at 16-21 of the BSL Regs. Briefly, this will be calculated by reference to the amount of the new accommodation floorspace (that is, the gross internal area of the new dwellings or purpose-built student accommodation) plus the amount of the new communal floorspace (that is, the gross internal area of certain communal areas of the building), multiplied by the "applicable area rate" for the local authority area in which the building will be situated.

The gross internal areas must be measured in square metres, and the applicable area rates apply per square metre. The applicable area rates for each local authority are set out in Schedule 3 of the BSL Regs. Significantly, the rate will be discounted by 50% if the development is carried out on previously developed land. This discount will apply where:

1. planning permission was granted on the basis of permitted development rights, or
2. the development is on land which either has a building on it or had a building on it at any point on or after the 1 July 1948.

These exceptions are subject to further qualifications. The amount of the discounted rates for each local authority area are also included in Schedule 3 of the BSL Regs.

To whom does the BSL need to be paid and when?

The levy must be paid to the local authority with building control responsibility for the area in which the works are situated by the earlier of the "completion notice date" and the date on which the building, or part of the building, is first occupied.

The "completion notice date" depends on which building control route the works have followed. E.g. If the works have proceeded via the local authority route, the relevant date is the date on which a person carrying out the works gives notice that the works are complete. Where the works have followed the Registered Building Control Approver (RBCA) route, the relevant date is the date the client issues a compliance declaration to the RBCA. If the works relate to higher-risk buildings, the date is the date on which a completion certificate application, or partial completion certificate application, is submitted to the Building Safety Regulator (BSR).

What happens if the BSL is not paid?

Where the BSL is not paid in accordance with the BSL Regs, the relevant building control authority (local authority, RBCA or BSR) may refuse to issue or confirm any completion or final certificate in respect of the works. This will prevent occupation or use of the building until such time as the levy is paid.

What can you do to prepare?

If the BSL applies, there is no way to avoid or circumvent the obligation to pay the levy in order to carry out and complete your residential development. This is understandable, as following the Grenfell Fire, the government has taken a policy decision to try to make sure that developers are responsible for paying the costs of meeting building safety measures in England. And as we have seen from the recent Building Safety Act cases that have come before the courts, these measures will be firmly enforced.

For developers with applicable residential projects in the pipeline, they should carefully consider the extent to which they are or will be in a position to make the relevant building control application prior to the 1 October 2026 deadline.

Any applications made for applicable residential developments from 1 October 2026 onwards, will trigger a requirement to pay the BSL and the BSL payment will need to be factored into the costs of the development.

The BSL will not apply to applications submitted for building control approval before 1 October 2026, or to subsequent amendments to those applications. However, if a building application is rejected or lapsed, necessitating the need to submit a new application on or after 1 October 2026, then it appears likely that the BSL will apply to the new application.

A note of caution – the BSL Regs are currently before parliament and subject to parliamentary approval. However, it is not anticipated that there will be many, if any, changes at this time and it appears that the 1 October 2026 deadline will be strictly enforced.