Building Safety Levy – Government Undertaking Second Consultation

28 November 2022. Published by Alexandra Anderson, Partner and Katharine Cusack, Partner and Sally Lord, Knowledge Lawyer

The Government has just announced it is commencing another consultation on building safety, this time by way of second consultation on the Building Safety Levy ("the Levy"). 

Following the many bills and regulations that have been introduced relating to building safety following the Grenfell tragedy, there was much concern by leaseholders (and taxpayers) as to who would be responsible for paying for the remediation of buildings needed to bring them up to the requisite standard. 

The Levy was first consulted on in February 2021. It was designed to protect the taxpayers and leaseholders and ensure the costs of the remediations for higher risk buildings fell to developers. The new proposals under the second consultation aim for the Levy to contribute towards remediation of cladding in buildings over 11m.  At least 49 developers have already pledged over £3million towards the remediations but it is thought there will still be a shortfall, which will need to be funded by the Levy.

The Government has confirmed the consultation will cover:

  • Overview and update
  • Exclusions
  • Supportive measures
  • Impact on industry
  • Sanctions and incentives
  • Appeals

The Government states "the levy will apply to all new residential buildings that require building control approval" and "will be payable by the client" which is the responsible developer. There, are, however, some expected exclusions to the Levy, to ensure community facilities are not affected, such as hospitals, children's homes etc. 

One of the main features of the consultation concerns collection. It is proposed that the Local Authority will collect the Levy and suggests a two-step process, alongside two of the gateway stages proposed by the Building Safety Act 2022.  Given the extent of the buildings that will require to call on the Levy is currently unknown, as is the amount that will be received by the Levy, the government is proposing to review the Levy itself every three years. 

Another aspect on which the Government is seeking to consult is the sanction issued for non-payment of the Levy. It is proposed that the principal sanction will be halting the progress of the development either by way of a stop notice or withholding final building approval. Further sanctions are proposed if misleading or delayed information is given. It remains to be seen whether this will indeed make its way into the final Levy and/or if it will have the effect anticipated. However, if the sanctions are not sufficiently serious, there will be no incentive for developers to comply. 

One area of concern highlighted by the second consultation is the impact of the Levy on the cost of projects.  The Levy will, of course, increase costs. The Government has responded to this concern by indicating that, eventually, the cost will 'feed' into land prices as it will affect the amount that developers are willing to pay for land. This, however, does not appear to address the concern about what will have happen with current developments. In reality, ot will take time to fully understand the impact of the Levy on the price of land and/or the impact on frequency of new projects undertaken.  

The consultation is due to end in February 2023 and the Levy is expected to come into force in later next year. 

For more information on this consultation or any of the changes brought in by the Building Safety Act 2022, please contact Alex Anderson or Kat Cusack.

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