Government announces the removal of the proposed exemption for Medium Sized Sites from the Building Safety Levy
The government has announced amendments to the Building Safety Levy (BSL) regulations which confirm definitions and remove the proposed exemption for Medium Sized Sites.
Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “The Building Safety Levy should never have been proposed, or at the very least the burden shared across the entirety of the built environment, from planners and regulators to builders and product manufacturers.
The decision to not implement our third fallback recommendation of exempting medium sized sites will be a nail in the coffin for many projects and because they will be the first to submit applications under the levy regime, hit SMEs hardest.
It is an appalling way for this exiting government to treat the businesses that did not cause the ills this levy intends to fix.”
In 2022, the government introduced the Building Safety Act (2022) in response to the Grenfell Tower Tragedy of 2017. Many of the key aims of this act, such as driving improvement of competence and standards across the construction industry, were welcomed by the industry with open arms.
The Building Safety Act (2022) also introduced the Building Safety Levy (BSL) – a government-imposed tax on all new residential developments designed to extract £3.4 billion from housing developers for ‘building-safety related purposes’.
Levy rates vary by local authorities, are calculated by Gross Internal Area (GIA) and are based on local house prices. Developments on Previously Developed Land (PDL) receive a 50% discount.
After ‘carefully considering the impact on Building Safety Levy revenues’, the Government announced that medium-sized sites (10 to 50 homes) will not be excluded from the levy.
It also made technical amendments and clarified definitions to provide more certainly on which sites of previously developed land qualify for the 50% levy discount.
These included:
- A new stand-alone definition of ‘building’ as a “structure or erection” which may include hardstanding areas where these are “reinforced for load bearing, paved or otherwise surfaced with man-made materials”;
- Clarification on what constitutes an “underground development” and the exclusion of buildings that are “wholly” underground from the definition of previously developed land;
- And the decision that land will not be treated as previously developed land if the physical development on the land was unlawful.
Rico Wojtulewicz, director of Policy and Market Insight, said: “Rejecting the proposed BSL exemption for medium sized sites will cause projects on the outskirts of towns and rural areas to become unviable and as it benefits the biggest builders the most, increase the delivery of very large developments.
It will shrink the size of homes, maximise units in apartment blocks, eliminate a desire for good design and worse of all, further damage the business models of our locally employing, apprentice training, quality focused, variety delivering SMEs.
The announcement did note that the government are keeping this decision under review, and we can only hope that the next government is ready to rewire Britain, change Whitehall’s anti British business culture and put fairness back into the tax system.”