It is part of the Government’s broader strategy to improve building safety and ensure developers contribute to the cost of addressing defective buildings. While the goal is to promote safety, the levy introduces fresh financial challenges for developers operating in the build-to-rent (BTR), co-living and purpose built student accommodation (PBSA) sectors.

With the publication of the Building Safety Levy Technical Consultation Response on 24 March 2025, the date for implementation has been pushed to autumn 2026. Nevertheless, developers need to understand the levy’s implications and impact on viability in the ever changing regulatory environment.

What are the key elements of the Building Safety Levy?

• The levy funds the remediation of residential buildings where the original developers have not taken responsibility for addressing fire safety defects.
• The levy will apply to new residential developments with 10 or more plots / units, or for PBSA developments of more than 30 bedspaces. Exemptions include affordable housing, NHS hospitals and care homes (amongst others), but most other types of residential developments are affected. Hotels are also expected to be exempt.
• The levy will be charged per square metre of qualifying residential floor space based on Gross Internal Area (GIA). Rates vary by local authority, with higher charges in high-value areas like London and the South East. This gives a mean undiscounted rate of £33 per m², and as much as £100 per m² for the most expensive borough. 
• There will be a discount of 50% for developments built on Previously Developed Land (PDL), also known as ‘brownfield’ land, where at least 75% of the land within the redline boundary qualifies as PDL.
• The levy must be paid by the developer prior to applying for a building control completion certificate. Partial payments for staged developments are not permitted, meaning the full levy will need to be paid prior to completion of the first phase. The completion certificate will be withheld subject to non-payment of the levy.

How will this affect the development of BTR, co-living and PBSA schemes?

BTR, co-living and PBSA developments are all subject to the levy, although lobbying from these sectors is likely to continue for exemptions or reduced rates. As these schemes are typically built at scale they will see a significant increase in costs, particularly as the levy will apply to the total GIA including communal areas.

Developers will need to begin to factor this into their appraisals. Invariably, this will put more pressure on the viability of some marginal projects.

To compound matters, larger developers may also be subject to the Residential Property Developer Tax (RPDT), which levies a 4% tax on annual profits exceeding £25 million. While BTR developments are generally exempt from RPDT, PBSA and co-Living developers will likely face double exposure increasing their overall tax and levy burden.

Recent developments

Although the government initially aimed to implement the BSL by April 2024, delays in finalising the secondary legislation and processing responses to the consultation have pushed it back to autumn 2026. With no transitional arrangements currently proposed, developers have approximately 18 months to factor levy costs into their financial planning.

As the levy is unlikely to apply to developments that have commenced the building control process before the implementation date, this may serve as an incentive for developers to advance their schemes earlier. In the meantime, BTR, co-Living, and PBSA developers should model potential impacts, engage with advisors and policymakers, and explore strategies to mitigate risk.

Further information

Contact Steven Brown

Service: Building & Project Consultancy