CONSULTATION RESPONSE: Building Safety Levy consultation

Context

A new Building Safety Levy was first proposed in February 2021 in order to raise funding to cover the costs of building safety expenditure. In November 2022 the Government consulted on the introduction of a Building Safety Levy to be charged on new residential buildings requiring building control approval in England.

The consultation sought views on the design and implementation of the Building Safety Levy. The Housing Forum consulted with members around their views and responded on behalf of our members.

The Housing Forum consultation response:

At The Housing Forum our membership draws from across the UK housing sector – including manufacturers, developers, housebuilders, architects, housing associations and local authorities. We are concerned that the additional cost of the levy will place a tough burden on the housebuilding sector, some of which make development unviable, threatening overall housebuilding rates which will have a knock-on effect throughout the housing and construction sectors.

Section 106 agreements are often renegotiated due to viability concerns and the Building Safety Levy is likely to increase this, which may mean less funding for Affordable Housing or infrastructure. If developers have paid for sites before being aware of the forthcoming Building Safety Levy they will not have been able to factor this cost into what they offer for the land, so viability may be threatened. The uncertainty in the housing market at present and recent rises in construction costs make this more likely, whilst the strain on social landlords’ finances means that they are unlikely to be in a position to help plug this gap without grant funding.

We are particularly concerned about regeneration schemes, which already struggle with lack of government funding and challenging viability.

The government is proposing a two-step process and charging points for the levy. We argue that a single stage process where the levy is collected only prior to completion would be preferable in order to ease cash flow problems for developers, and reduce administrative costs of collection.

We supported the proposal that Affordable Homes should be excluded from payment of the levy. Affordable Homes should be clearly defined and exempted, whoever develops them. Social landlords’ finances are extremely strained at present, so we would support the exemptions for social landlords. Putting the levy onto social landlords would simply increase the subsidy required from government to maintain levels of affordable housing (plus administrative costs, which would simply be lost).