The Building Safety Levy Is Now In Force

The Building Safety Levy (the BSL) is in force from 1 October 2026.

Our August 2025 update (read here) covered the draft Building Safety Levy (England) Regulations 2025 (SI 2025/1236). These regulations are now final and amended by The Building Safety Levy (Amendment) (England) Regulations 2026 (SI 2026/1034) (collectively the Regulations).

The BSL is therefore now a live development cost and something that developers, funders and lenders providing development finance, must factor into their assessments of acquisition and development costs, viability and other appraisals, as it will ultimately impact the financing of qualifying residential developments in England.

The core points that we set out last year have not changed

• The BSL (effectively a tax on new residential floorspace) will be chargeable in respect of ‘building control applications’ (as defined by the Regulations) made on or after 1 October 2026, where three ‘charging conditions’ are met and no exemption applies
• The BSL applies in England only
• Developments already in the building control process before 1 October 2026 will generally not attract the BSL. This includes existing full plans applications, initial notices, and “Gateway 2” submissions, i.e. higher-risk building control approval applications falling within the gateway regime introduced by the Building Safety Act 2022. However, if a pre-1 October 2026 application is rejected and a new application is required on or after 1 October 2026, the BSL may apply
• The BSL liability is assessed by reference to the wider chargeable development, not simply by reference to each individual building control application or notice. Developers should therefore not assume that splitting a larger scheme into separate applications or notices will reduce or avoid the BSL liability
• The BSL applies to “qualifying” major residential developments–these are generally developments creating 10 or more dwellings or 30 or more purpose-built student accommodation bedspaces
• If applicable, the BSL is generally calculated by reference to chargeable residential floorspace and local authority rates, with a 50% discount rate available for qualifying previously developed land (PDL). The BSL calculation depends on three key factors: (1) location; (2) amount of chargeable residential floorspace; and (3) whether the site qualifies as PDL – to do so, at least 75% of land to which the relevant planning permission relates must be PDL
• The BSL can also apply to conversions which introduce residential floorspace, or developments which increase existing residential floorspace
• The Regulations include exemptions for certain categories of accommodation and persons, including in relation to affordable/social housing, supported housing and other specified uses. Therefore, developers and funders should check the status of the developer or operator, the intended use of the accommodation and the basis on which any exemption is claimed before finalising viability, funding or cost-to-complete assumptions
• The BSL is payable before the relevant building control completion process is completed. In practice, non-payment may prevent the issue or acceptance of the relevant completion or final certificate and may therefore delay occupation, particularly for higher-risk buildings. The payment requirement is therefore a hard stop in the relevant completion-stage building control process.

What’s new?

Following the draft amendments published earlier this year, the current Regulations make targeted adjustments to the 2025 Regulations.

• The most prominent change concerns PDL. The amendments broaden the definition of a “building” for the PDL test to include a wider range of man-made structures and erections, including certain reinforced, paved or otherwise surfaced areas and plant and machinery. This could bring some sites within the scope of the discount available for PDL which would not have qualified under the original wording. There are, however, still limits to the broadened definition – wholly underground buildings and unlawful building operations are expressly excluded when assessing whether land qualifies as PDL
• The Government has separately consulted on building-control process changes, particularly to address potential avoidance through the use of building notices and to ensure consistency across building control routes. Those proposals are not part of the 2026 Amendment Regulations and are being progressed separately from the Regulations now in force.

Practical actions could now include

• Those involved in developments that may be subject to a BSL liability should obtain technical expertise, support and advice from surveyors and other professional advisers to correctly measure the development and to calculate the potential liability, considering any possible discounts. This includes where a development may have previously been assessed as not qualifying for the PDL discounted levy rate, as the amended definition of PDL may produce a different result
• Include the BSL in acquisition and development appraisals, cost-to-complete assessments, and any required loan facilities or investment required to fund the related development. Ensure that funds are available to pay the BSL when it is due
• Allocate responsibility for BSL information, payment and certification in development, construction and finance documents. Be mindful of a collecting authority’s right to inspect a development to verify information submitted as part of the application
• Consider that delayed BSL payment could affect timings of completion, occupation, and exit of a development and therefore milestones of financing arrangements
• On any Real Estate transaction when acting for a funder or developer, or buyer or seller, ensure that suitable due diligence is undertaken in relation to the BSL where applicable – this includes raising necessary enquiries and requesting the relevant information and evidence. Consider whether transactional documents will take into account the sharing of BSL-related information and/or payment of the BSL liability
• Closely monitor in-progress building-control applications relating to developments that could have been liable for the BSL if submitted on or after 1 October 2026. Liability may arise if an existing application or notice is rejected, cancelled, withdrawn or otherwise requires replacement by a fresh application or notice, or if proposed changes require a separate application or levy-relevant amendment notice
• Lenders should align their facility documents to take into account the BSL including information undertakings and covenants, conditions precedent, milestones, budgets, and monitoring arrangements. Facility documents should clearly address who bears responsibility for providing the funds required to pay the BSL, when BSL funds will be available and how payment evidence must be provided so that the relevant completion or final certificate process is not delayed and occupation of the development can take place.

In conclusion, for developers and funders, the immediate priority is to check which live schemes are caught, revisit any PDL assumptions and make sure the BSL is reflected in viability, funding and delivery planning.