On 22 November 2022, the Department for Levelling Up, Housing and Communities (DLUHC) published a further consultation on the Building Safety Levy, which is to be introduced as part of wider measures to help fund the remediation of unsafe cladding. This follows a consultation on the policy design of the Levy in 2021.
The Levy was initially intended to apply to ‘higher-risk’ buildings, being buildings with at least two residential units, care homes or hospitals which are at least 18 metres in height or have at least seven storeys. However, in January 2022 it was announced that the scope of the Levy would be expanded to cover all residential buildings.
Section 58 of the Building Safety Act 2022, which received Royal Assent on 28 April 2022, gives the Secretary of State the power to make regulations regarding the imposition of a Building Safety Levy. The consultation issued on 22 November 2022 seeks views on the technical details and implementation of the Building Safety Levy, to inform the drafting of the regulations.
In summary, the Levy will apply to all new residential buildings requiring building control approval in England, and will be paid by the person or organisation responsible for the construction project. The consultation document does not give any indication of the likely rates of the Levy, other than to say that it will be calculated on either a ‘per unit’ or ‘per square metre’ basis, and that different rates may be applied with reference to geographical boundaries to reflect local land values, house prices and based on whether the site is a ‘greenfield’ or ‘brownfield’ development.
The consultation document suggests that the Levy will be collected by local authorities as part of the building control process:
In its response to the 2021 consultation, the NHF called for affordable housing to be excluded from the Building Safety Levy, and for non-profit registered providers of social housing and their wholly owned subsidiary companies to be exempt from paying the Levy.
It is pleasing, therefore, that the latest consultation document proposes that affordable homes should be excluded from the Levy, whether they are new-build properties or private-sector properties that have been purchased for use as affordable homes (which we anticipate will exclude from the Levy affordable homes developed under Section 106 obligations). Furthermore, the consultation suggests that the regulations will exempt non-social homes built by registered providers and their subsidiaries.
The NHF is keen to ensure that these exclusions and exemptions are reflected adequately in the final regulations. In the meantime, the NHF will be discussing with DLUHC the scope of the proposed exemption for subsidiaries of registered providers, and in particular whether this is capable of extending to joint ventures delivered through limited liability partnerships.
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