Building Safety Levy (Amendment) (England) Regulations 2026

Debate between Baroness Blake of Leeds and Baroness Pinnock

Wednesday 2nd September 2026 Grand Committee

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Blake of Leeds) (Lab)]

My Lords, the remediation of residential buildings with unsafe cladding in England is a priority for this Government. Nine years on from the Grenfell tragedy, there is no justification for any building to remain unsafe. Helping residents to feel safe in their homes and move on from this issue is crucial work.

The Government are committing £5.2 billion of taxpayers’ money to the cost of remediation and the building safety levy is an essential part of the remediation funding package, which will protect leaseholders from costs and ensure that taxpayers are not further burdened. We estimate that the levy needs to raise £3.4 billion, likely over a 10-year period. The revenue target may be adjusted in accordance with the number of buildings requiring remediation and the costs of works.

The levy regulations were made in November 2025 and will come into force on 1 October 2026. The draft amending regulations before the Committee today clarify how the levy will work and are intended to come into force on 1 October. The levy will be charged on certain building control applications for new residential floor space in England. It is important to note that developers have known about the levy since February 2021 and its rates since March 2025, providing a significant lead-in period to plan for and incorporate these costs into their projects. It will start being charged on new applications from 1 October 2026.

The 2025 regulations allow for development on previously developed land, often referred to as brownfield land, to benefit from a 50% discount levy rate. This recognises the higher costs of building on this type of land and therefore protects the viability of development on these brownfield sites. My officials received feedback that the definition of previously developed land was not clear. In particular, stakeholders noted that it was not clear whether car parks and other areas of hard standing that would appear previously developed would actually qualify for the discount. Our intention has always been to support development of sites having these kinds of features, so these regulations amend the definition to make it clear where areas of hard standing can qualify. This will better reflect the original policy intention and, hopefully, make it easier for local authorities and developers to understand which sites qualify for the discount, reducing costly and time-consuming disputes. These regulations and the updated guidance provide more information about how this change works.

We also have a small number of minor technical amendments and corrections included in the instrument, including setting clearer time periods for spot checks, clarifying levy information requirements, amending how levy update notices are constituted and clarifying processes for revised levy determinations, refunds, reviews and appeals. We will keep the rates and processes under review and we will report at least every three years. I beg to move.

[Baroness Pinnock (LD)]

My Lords, first, I wish to welcome the noble Baroness, Lady Blake of Leeds, to her new role. I look forward to working with her; I am sure that we will agree on some occasions, maybe more than most. Let me say right from the beginning that we Liberal Democrats accept the technical changes in this SI, because in effect that is what they are. The amendments are sensible, practical and entirely necessary to prevent any chaos following the levy’s coming into force in October.

The positive changes to which the noble Baroness, Lady Blake, has referred are important to remove the loophole of previously developed land. Developers are very good at finding loopholes, so that is important. The spot check and having a strict notification period are also important, as well as separating purpose-built student accommodation from being classed alongside residential. That is positive and we support it.

The Government have set a target of raising £3.4 billion, which is good. However, they are planning to raise this over 10 years. In the first year, the levy raises zero. In the second year, it raises—these are estimates I found from, I think, the Office for Budget Responsibility—just £55 million. By the fifth year, so in 2030-31, it will raise £395 million a year, so over the first five years it will raise just £1 billion of the £3.4 billion that it is estimated to raise. I guess there will be reasons for that, but it is unlikely to raise significant sums in the first couple of years.

Once you have in mind that that is how the funding is going to be and that it will be five years before anything significant comes into the coffers to support remediation, you say to yourself that the Grenfell Tower tragedy was nearly 10 years ago and the Government are still having to find ways of raising sufficient funds to pay for remediation on top of the £5.1 billion, I think, that they have put aside. About 50 major developers have signed up to a scheme to fund it. The Minister has just said that there is no justification for buildings to remain unsafe, but 46% of buildings have not even had work started on them.

Although the levy is important, and I accept the positive changes that are being made, the lack of urgency in all this is worrying, especially if you live as a leaseholder in one of those blighted apartments. I say “blighted” because, if you are a leaseholder waiting for flammable cladding to be removed or safety defects to be remedied, you are stuck in that flat because you cannot sell or remortgage. You are stuck. That is 10 long years, more so when this levy is coming to light.

I have some questions for the Minister. Considering that only £1 billion will be raised in the first five years, who will then fund any of the schemes that would be funded under this levy? How will they be funded? Presumably, nobody is going to say, “You can’t get on and do it because we haven’t got the money coming into the coffers just yet”. Is there any way that the Government could find to accelerate the scheme so that more funding comes in in the first five years? That would give leaseholders some hope. My next question is also about leaseholders. Despite the Government’s best efforts, which I support, some of them are still finding that freeholders and management companies are putting some of the costs on to service charges. How can the Government get the message out to leaseholders that that is not right and that they can go to First-tier Tribunals to challenge it?

I have said all along in this terrible situation that the one group of people who are completely innocent is the leaseholders. They do not even own the bricks and mortar; they lease the space in between the bricks and mortar. They should not be paying anything. Anything that the Government can do to protect them further would be welcome. Having said that, I support what is in the statutory instrument.

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[Baroness Blake of Leeds (Lab)]

I thank noble Lords for their very kind and welcoming comments. It is interesting to reflect on how long we have been working together. The noble Baroness, Lady Pinnock, and I go back, I think, to the last century.

[Baroness Pinnock (LD)]

Yes, probably.

[Baroness Blake of Leeds (Lab)]

It is a great privilege to be in this position, and I very much look forward to working with both the noble Baroness and the noble Lord. I stress “with” rather than “against”, because I think we come from a strong, shared commitment to all things local government—in particular, serving the people in our communities that we have variously represented. There are some tough times ahead, but I will do my best to address the concerns raised today. Dialogue will be ongoing, of course, particularly given the different legislation that is proposed; that will give us a real opportunity to go into much greater detail than we can probably do today.

Let me respond to the concerns from the noble Baroness, Lady Pinnock, about the money, which is, of course, a crucial issue. To reiterate, the Government are committed to remediating buildings as quickly as possible. I have to say that the launch of the levy, which will come in in October, will not affect the pace of remediation. The Treasury has agreed that the necessary expenditure can be made in advance of receipts from the building safety levy rather than slowing remediation to match the profile of the levy receipts. Of course, the Government will report on levy receipts and remediation expenditure in the annual trust statement. I hope that gives the reassurance that the noble Baroness has been looking for.

The remediation of unsafe cladding Bill will deliver on the manifesto commitments to address the pace of the remediation work. Most importantly, it will ensure that those responsible for the building safety crisis pay towards fixing the problem they have caused. We all know that there is further work to do on this. I am grateful for the collaboration that we have had so far from some developers, but I also recognise that there are other avenues to pursue, as encouraged by those developers. We have to make sure that we take on the most reluctant landlords; in particular, we must make sure that they take action and that, if they do not, they face severe sanctions.

I want to reassure the noble Lord, Lord Jamieson. This is interesting because I first started working on this when I was in Opposition, going back to 2022, and some of the comments that were brought up today have been a feature throughout. I reassure the noble Lord that we have worked closely with stakeholders and industry to minimise the impact on housing supply. The building industry as a whole is balancing the need to raise the revenue required to make homes safe, and those responsible show a clear recognition that this is an important dynamic on which we need to keep moving to achieve our manifesto commitments. As the noble Lord said, they are ambitious, but there is the will to do it, and the Secretary of State is committed to working on all fronts to move this forward.

The NPPF definition is specifically designed to inform planning policy, whereas the levy regulations set out criteria for developments and local authorities to apply on a site-by-site basis to ascertain qualification for a tax discount. We need to make sure that we do not merge these facts together. The 75% is designed to approximate the NPPF definition for tax purposes. All these matters have been looked at and that will continue to be the case as we move forward. We have a strong ambition around affordable housing running alongside our ambition around remediation. I hope both noble Lords will welcome the importance that we are giving this issue to help take us forward.

To recap, the building safety levy is essential to fund the remediation of historic building safety issues, particularly without further burdening residents and leaseholders. The amending regulations laid before the Committee are designed to support this work and make the levy work more efficiently and in accordance with our initial intention to support the redevelopment of existing sites. They are intended to correct drafting and to improve the clarity and consistency of process for developers and local authorities, rather than to alter the underlying policy design of the levy.

To further reassure the noble Lord, consultation with local authorities has been intense. We have made sure that the extra duties funding is in place, helping them to come forward. I am very pleased with the response so far from local authorities, as it is critical that we have that relationship with them so that they can fulfil their responsibilities in this space. As well as the government contribution to funding, we all accept that the development industry must contribute to our work to make buildings safe for those who live in them.

To repeat, the Government are committed to building 1.5 million homes this Parliament to meet the country’s long-term housing needs and unlock growth. This must work in parallel with our commitment to remedying the building safety features of the past. I repeat that we expect developers to make a full contribution to the overall costs of making buildings safe, reflecting the wider benefit they derive from a well-functioning market and the substantial funding and support the Government have already provided and continue to provide for the housing market. With those comments, I commend the instrument to the Committee.