The Home Builders Federation (HBF) has expressed significant apprehension over the government’s proposed Building Safety Levy. Over 100 housebuilders have jointly signed a letter, in which the HBF termed the levy as “nakedly anti-development.”
The residential property developer tax is part of the Building Safety Levy package which is a tax which applies to annual trading profits exceeding £25 million in UK residential development activities. Its intention is to fund the cost of remediating cladding issues and other building safety defects that affect the UK’s residential housing stock.
They urge reconsideration of the levy, highlighting how this additional tax could result in fewer homes, including affordable homes, being built with the added financial burden endangering the survival of some struggling small and medium-sized enterprise (SME) home builders.
The letter emphasises that the new tax, projected to generate £3.4 billion, is likely to severely undermine efforts to meet the government’s goal of constructing 1.5 million new homes.
It also points out that there has been no formal impact assessment conducted to evaluate how the levy will affect housing supply. This year is set to see work undertaken to more accurately assess how much funding might realistically be required from the industry.
HBF further highlights that UK housebuilders have already contributed £6.4 billion toward building safety remediation through the 4% levy and additional commitments from over 50 housebuilders. In contrast, product manufacturers, some of whom faced criticism from the Grenfell Tower Inquiry Phase 2 report, have yet to provide any financial support.
The industry argues that the government has yet to justify the necessity of this tax. Over £2.5 billion remains unallocated in the existing £5.1 billion Building Safety Fund, created over four years ago.
HBF and the letter’s signatories are advocating for more thorough analysis before the levy is implemented. They are requesting a “robust” impact assessment and for the government to consider how the tax will influence the construction of both private and affordable homes.
The letter encourages the government to take a bolder stance with product manufacturers who, it says, dismissed attempts by the previous administration to secure financial contributions for building safety remediation efforts.
The letter suggests that the levy appears to have been crafted to restrict housing supply, especially in regions facing significant housing affordability challenges, by raising costs by thousands of pounds for each new home constructed.