Proposals for a new tax on developers will only affect 200 housing developments in a year and with no estimates of how much money this will bring in, how far it will go to offset the costs of fire safety defect remediation remains unknown.
In a consultation paper published this week, the government estimates that if the Building Safety Levy excludes social housing, around 12-14,000 housing units will be subject to the charge in one year.
The government needs the Building Safety Bill to be enacted before the levy can form part of the new building control process for higher risk buildings. Secondary legislation required for the levy will need to be accompanied by an impact assessment and that is when the potential revenue will most likely be set out.
The government is introducing gateways for different stages in the lifecycle of a building, and gateway two where the levy would apply, is likely to come into force from 2023.
The Building Safety Levy for England sits alongside the UK-wide proposal for a Residential Property Developer Levy on the profits of developers.
The government defines higher risk as buildings that contain at least two residential units, care homes or hospitals and are at least 18 metres in height.
The levy will be paid by the Client, defined in the consultation as the organisation for whom a construction project is carried out. Affordable housing projects and hospital developments caught in the definition of higher risk buildings and refurbishments that require building control approval would not be liable for the levy. There is also some relief for smaller developers, with a proposed payment schedule.
The consultation paper provides two options for calculating the levy:
- a charge per square metre of the entire internal floor area, subject to certain exclusions, or
- a fee per residential unit in scope of the levy.
No decision has been made about which organisation will administer and collect the levy on behalf of the government. Where the levy is not paid, building control consent will be withheld.
The consultation closes on 15 October 2021.