The Home Builders Federation (HBF) has sent a letter to the chancellor of the exchequer regarding the impact of the proposed levy on house building
The HBF’s concerns about the Building Safety Levy include the impact on SME homebuilders.
The letter calls for a suspension of the levy and a reassessment of potential impacts.
Over 100 HBF members signed the letter
The Building Safety Levy is set to be implemented later this year and is expected to add £3.4bn. However, the HBF is concerned that the more likely outcome is that housing delivery will be negatively affected in light of the 1.5m new homes target.
This is due to the impact that paying an extra tax will have on small and medium-sized homebuilders. The letter further notes that no impact assessment has been conducted, so consequences will only be seen when the levy is already in place.
With development and material costs already rising, coupled with the skills shortage, the HBF is primarily concerned that the Building Safety Levy will simply put more pressure on SMEs that are already struggling to meet costs.
The letter also notes that UK homebuilders already contribute to building safety remediation with the 4% precept on Corporation Tax having already contributed £6.4bn, alongside self-remediation commitments from over 50 builders. On the other hand, product manufacturers have not financially contributed in spite of criticisms from events such as Grenfell.
The Building Safety Levy should be delayed, say the HBF
A key aspect of the letter is that the tax has not been shown to be necessary and it is on the government to prove it is. This is especially demonstrated by just £2.6bn of the £5.1bn in the Building Safety Fund has been allocated.
Therefore the HBF are calling for the levy to be suspended and a deeper analysis performed to both assess the true impact that it will bring, and for the government to demonstrate the need for the tax.
This would be performed through the government:
1. Completing the work promised by officials to be undertaken during 2025, to determine how much funding is required.
2. Publishing a robust Impact Assessment to explore how many fewer private and Affordable Homes will be built as a result of the levy.
3. Reconsidering the collection and administration of the levy, which is expected to hit SME home builders particularly hard.
4. Be braver in tackling the product manufacturers who rebuffed attempts by the previous administration to obtain financial contributions for building safety remediation efforts.
The letter from the HBF can be read in full here.
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