The Homes Builders Federation (HBF) has released research showing that the majority of house builders feel the new levy will do more harm than good
The Building Safety Levy is set to come into force on 1 October 2026, and 91% of respondents to the HBF’s research say it will affect site viability.
The research, conducted in partnership between the HBF and Quantum Development Finance, shows that the overwhelming majority of house builders are concerned about the levy.
Some SME house builders have already changed plans
36% of respondents said that they have already delayed, redesigned, or cancelled some of their schemes in anticipation of the Building Safety Levy.
The HBF has previously stated, and continues to maintain, that the levy will only put more pressure on the industry at a time when it already faces high development costs. Their research finds that the cost of building a typical new home has already increased by roughly £76,000 over the past five years, and the levy accounts for £2,320 of this.
This will compound the burden on home builders, who already pay a litany of taxes, levies, and policy requirements and face inflationary pressures.
Furthermore, many SMEs have been disappointed that medium-sized developments have not been granted an exemption from the levy, saying that charging these sites will negatively affect smaller developers, who have never and likely never will build high-rise buildings and have had no role in creating the issues that the levy is tackling.
The HBF also points out that it is unfair to tax the house building industry as a whole for legacy safety issues, in spite of the industry being ready and willing to put in the work to remediate these issues, when product manufacturers and overseas developers who have had an equal hand in causing these issues have not yet been required to contribute towards remediation.
The levy will only prevent new housing projects, say HBF
In their survey, 69% of respondents also said that the levy will make them less likely to invest in new development opportunities, with only 9% saying that it is still too early to say how this aspect will be affected. In London alone, 86.7% of respondents agreed they would be less likely to invest, which is especially concerning as London has consistently delivered below housing target numbers.
Neil Jefferson, chief executive of the Home Builders Federation, said: “The government has set ambitious housing targets, but the ongoing layering on of costs onto development by successive governments has made a growing proportion of potential house building sites unviable.
“The new levy, compounded by other rising costs, tighter margins and challenging market conditions, will make even more developments unviable. SME developers in particular are being forced to rethink investment decisions, delay sites and reduce output as costs continue to increase.
“The home building industry is already making a substantial contribution towards the cost of remediating historic building safety issues, yet this levy places a further burden on developers who played no part in creating those problems.
“We are urging the government to pause the introduction of the levy and assess whether it is still necessary, particularly given the significant unallocated funding that already exists.”
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