Amendments to the Building Safety Levy have been announced, confirming definitions and completely removing the proposal to exempt medium-sized construction sites
The Building Safety Levy amendment will come as a disappointment to many in the industry, as it is expected to prevent many housing sites from being developed.
Within the amendment, several definitions have also been clarified.
“A nail in the coffin for many projects”
The levy was introduced in the announcement of the Building Safety Act in 2022, and proposes a government tax on all new residential developments, intended to raise £3.4bn to put towards building safety purposes.
The rates for the levy vary, but are calculated by taking the Gross Internal Area (GIA) of a development and comparing them to local house prices, while developments built on previously developed land (PDL) receive a 50% discount.
The levy has been a generally unpopular aspect of the safety act, and this recent decision is no different.
Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “The Building Safety Levy should never have been proposed, or at the very least the burden shared across the entirety of the built environment, from planners and regulators to builders and product manufacturers.
“The decision to not implement our third fallback recommendation of exempting medium-sized sites will be a nail in the coffin for many projects and because they will be the first to submit applications under the levy regime, hit SMEs hardest.
“It is an appalling way for this exiting government to treat the businesses that did not cause the ills this levy intends to fix.”
Rico Wojtulewicz, director of policy and market insight, said: “Rejecting the proposed BSL exemption for medium sized sites will cause projects on the outskirts of towns and rural areas to become unviable and as it benefits the biggest builders the most, increase the delivery of very large developments.
“It will shrink the size of homes, maximise units in apartment blocks, eliminate a desire for good design and worse of all, further damage the business models of our locally employing, apprentice training, quality focused, variety delivering SMEs.
“The announcement did note that the government are keeping this decision under review, and we can only hope that the next government is ready to rewire Britain, change Whitehall’s anti British business culture and put fairness back into the tax system.”
Several definitions were also made in the amendment
Besides the unpopular decision to remove the exemption, several technical amendments and definitions were established to improve certainty.
This includes:
- A new stand-alone definition of ‘building’ as a “structure or erection” which may include hardstanding areas where these are “reinforced for load bearing, paved or otherwise surfaced with man-made materials”
- Clarification on what constitutes an “underground development” and the exclusion of buildings that are “wholly” underground from the definition of previously developed land
- And the decision that land will not be treated as previously developed land if the physical development on the land was unlawful
Regarding the levy, the NFB has previously labelled it “anti-growth”, with Rico Wojtulewicz saying: “Small builders came to the government with a solution that shared remediation costs across all accountable industries, as well as delivered a ‘polluters should pay more’ principle. It is devastating news that a fairer form of unfairness has been rejected.
Read more about the NFB’s proposed solution here.
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