The Building Safety Levy

What Developers Really Need to Know

From 1 October 2026, a major new cost will start to appear on residential development cost plans across England: the Building Safety Levy (BSL). Introduced under the Building Safety Act 2022, this levy is designed to make the development industry contribute to the ongoing costs of building safety and remediation, shifting some of the burden away from leaseholders and taxpayers.

What Is the Building Safety Levy?

In simple terms, the BSL is a per-square-metre charge on new residential development. It’s not a general tax on construction, but a specific levy linked to safety issues raised by the Grenfell tragedy and subsequent reforms. Over the next decade it’s expected to raise around £3.4 billion to help fund building safety remediation and regulatory oversight.

The levy is calculated on gross internal floorspace, including communal areas, multiplied by a rate set for the local authority area where the development sits. Brownfield or previously developed land benefits from a 50 % reduction in the rate, recognising the higher costs often associated with such sites.

When Does It Apply?

The critical date to remember is 1 October 2026. Only building control applications, initial notices or related submissions made on or after that date will trigger a levy liability. So a planning permission granted before 1 October will still attract the levy if the building control application is lodged after that date.

Projects are generally exempt if they involve fewer than 10 residential units (or fewer than 30 bedspaces in purpose-built student accommodation), and certain uses such as social housing, care homes, hospitals, schools and other community uses are excluded. Non-profit registered providers of social housing are also exempt.

Who Pays, and When?

The levy liability lies with the “named client” on the building control submission. In practice, this is most often the developer, though in some cases where a landlord or investor is clearly identified as the client it could fall to them instead.

Importantly, you cannot legally occupy the building until the levy has been paid and a completion certificate issued. If the levy isn’t settled, the building control authority can withhold completion certification, delaying handovers, sales and lease registrations.

Viability, Density and Land Values

For developers, the levy is essentially an additional up-front cost that wasn’t present at the planning stage for many current schemes. Because it will apply at building control rather than planning, it may influence decisions about site selection, mix and density.

On smaller sites just above the 10-unit threshold, the BSL could materially affect viability – particularly where land values, profit margins and S106 obligations are already under pressure. In highly priced areas or where communal space is generous, the per-square-metre charge can erode margins unless developers respond with careful cost modelling and possibly even redesigns.

Why Good Design Still Matters

One of the more subtle effects of the BSL is in its incentive structure. Because the levy is tied to gross internal area, efficient planning and design that minimise unnecessary floorspace, especially high-cost communal areas, can reduce overall costs. Thoughtful layouts, reduced circulation and smart multi-use spaces may help keep levy liabilities down without compromising quality.

Moreover, developments that are safer by design, with clear fire strategy, robust compartmentation and well-coordinated building control submissions, are less likely to incur delays or costly remediation, which can be more damaging to viability than the levy itself. Good design upfront mitigates both cost and risk.

In short: the Building Safety Levy represents a significant new cost stream for residential developers in England. But with early planning and intelligent design, it can be anticipated, managed and factored into viable schemes rather than treated as an unwelcome surprise.

Acting now, before October 2026, will make the difference between being caught unprepared and turning this regulatory shift into a competitive advantage.