Developers have six months to prepare for the Building Safety Levy: here’s what you need to know

1 October 2026 marks the start of the Building Safety Levy, introduced after Grenfell to help fund the remediation of unsafe residential buildings and improve overall building safety standards.

There’s no transition period, so developers will need to plan now, factoring it into projects, finances and delivery timelines to avoid disruption.

Some developers may be able to postpone the first hit.

The levy needs to be paid in full upon or before applying for a completion certificate, irrespective of phased completion. So, as a first step, developers should review projects to see which are likely to fall within the scope of the levy, and consider whether schemes can be programmed to submit applications before the deadline.

Also, because local authority rates vary, developers may want to submit applications before the deadline in locations with higher rates.

Once it’s here, though, the levy will need to be managed and below is some guidance for that.

The client is responsible for paying the levy, so developers should have a clear understanding of who exactly the ‘client’ is. This should be clear in development agreements, building contracts, professional appointments and commercial arrangements to avoid uncertainty later, particularly where client identities or ownership may change.

Developers should also factor the levy into their financial planning. The government has published charging rates for local authorities, allowing assumptions to be built into offers for land, project appraisals and cost planning. Understanding this early will help developers evaluate project viability and costs.

Cashflow and reserves should be carefully managed. Payments can’t be staged, even where a development has multiple phases. Rates are subject to review every three years and, although not subject to annual indexation, levy changes are possible at the end of the review periods.

There are opportunities to reduce the cost. For example, a 50% discount is available for developments where at least 75% of the site qualifies as brownfield under the statutory definition. But any potential savings should be balanced against contamination and possible brownfield site complexities.

Some permitted development schemes may qualify for discounted rates. The levy applies to residential development, so increasing the proportion of commercial or other uses would reduce the overall chargeable gross internal area.

Because the levy applies to new residential floorspace, it may make reuse or refurbishment more attractive for some projects.

The levy applies to communal space, with a proportionate charge where this is shared between chargeable and non-chargeable.

For certain asset classes, such as build-to-rent, purpose-built student accommodation and co-living, developers may need to consider the size and extent of shared spaces early because higher proportions of communal space that do not directly generate rental or sales income may negatively affect viability.

The government has published details of the levy process, so organisations should set up internal procedures for assessing liability, preparing the necessary information and calculations, and making payments at the appropriate time.

If a liability notice has been issued and not paid, the completion certificate will be withheld until payment is received. That means allocating clear information-gathering responsibilities will help ensure a smooth transition to the new levy regime.

It will take administrative resources to submit detailed information to the local authority to calculate the levy. This includes dwelling numbers, floorspace calculations and whether the site is brownfield. Applications can be rejected if levy information is not included. Although the rejection can be appealed, this could cause delays and create additional costs.

The regulations also provide for spot checks to ensure the information given is correct. Developers should make sure robust internal checks are in place so that information is accurate.

While six months might feel like ample time, developers who proactively review their pipelines, programmes, design and financial planning – and who clarify their internal processes – will be in a much stronger position to manage the timing and cost impacts of the new regime.

Michael Weissman is a partner, construction, at Howard Kennedy