The Building Safety Levy comes into force on 1 October 2026 and will apply to some new residential developments in England. It is designed to help pay for historic building safety remediation, but for small developers it is another cost to pay to get their project off the ground.
For many FMB members, the most important point is simple: developments of fewer than 10 new homes are exempt. Once a scheme reaches 10 new homes, it may fall within the scope of the levy.
Does your project need to pay the Building Safety Levy?
A residential development is exempt from the Building Safety Levy if it includes:
- Fewer than 10 new dwellings; or
- Fewer than 30 new bedspaces in purpose-built student accommodation (PBSA).
This means many small, local developments delivered by SME builders will not have to pay the levy. But sites at or above 10 homes will need to be checked carefully.
Industry view from the FMB
We know the levy won't be welcome by the industry and adds to a long list of costs. The FMB lobbied hard, and managed to secure concessions to ensure the smallest house builders, those building under 10 won't be impacted by this. But for those wanting to build more 10 or more homes you will need to think about whether this will impact the development's viability.
The financing of this new levy will be calculated by your local authority as part of the building control process as of 1 October 2026 so be prepaid for extra costs if you're submitting new applications from or after this point.
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Why the 10-home threshold matters
The levy rules look at the overall size of the development. If a scheme includes 10 or more new homes, it is treated as a major residential development for levy purposes.
That makes the difference between nine and 10 homes important. A nine-home scheme may be exempt, while a 10-home scheme could face an extra cost that affects viability, land values and cashflow.
The new NPPF
The Government has also published a new National Planning Policy Framework (NPPF). This is separate from the levy, but it includes one useful change for SME house builders.
The NPPF now recognises 'medium development' as housing schemes of 10 to 49 homes on sites of up to 2.5 hectares. This is welcome and reflects points made by the FMB in our consultation response, where we called for national policy to better recognise SME-led sites.
But this does not change the levy exemption. A 10-home scheme may be medium development in planning policy, but it can still be caught by the Building Safety Levy.
What to check now
If you are planning future residential schemes, ask:
- Will any planned schemes include 10 or more new homes?
- Could the levy affect site viability?
- Have potential costs been built into land and financial planning?
- Could building control timings affect liability?
Treat the levy as an early viability check, not something to look at once a scheme is already committed.
How FMB is responding
The FMB will continue to engage with ministers and officials on the impact of the Building Safety Levy on SME developers. We will keep arguing that planning and building safety reforms must support small, local builders, not make it harder for them to deliver the homes communities need.
Building Safety Levy FAQs
When does the Building Safety Levy have to be paid?
The levy applies to relevant building control applications submitted from 1 October 2026. Payment is made to the local authority acting as the collecting authority and must be made before the earlier of occupation or completion.
Who is responsible for paying the levy?
The levy is linked to the relevant building control application. Developers should expect the local authority collecting authority to calculate and collect the charge using the information provided through the building control process.
How is the Building Safety Levy calculated?
The levy is charged per square metre of chargeable floorspace. Rates vary by local authority area. The Government has also set discounted rate for qualifying previously developed land (PDL) sometimes known as brownfield land - with 50% reduction in the levy for sites where at least 75% of land within the 'redline' boundary is designated as PDL.
How does the levy work for phased developments?
Developers should look at the wider planning permission, not just each individual building control application. Splitting a larger development into smaller phases may not avoid the levy where the wider scheme meets the threshold.
What happens if planning permission was granted before 1 October 2026?
The key trigger is the relevant building control application or notice, rather than the date planning permission was granted. Developers with live or upcoming schemes should check the Government guidance and speak to their professional advisers before assuming a project is outside scope.
Are conversions or change-of-use schemes subject to the levy?
They can be. The levy can apply where a conversion or change-of-use scheme creates new chargeable residential floorspace and meets the relevant threshold. Developers should check how net additional residential floorspace is treated for their scheme.
