Building Safety Levy (England) Regulations 2025

Baroness Taylor of Stevenage Excerpts

Wednesday 15th October 2025 Grand Committee

Moved by

[Baroness Taylor of Stevenage]

That the Grand Committee do consider the Building Safety Levy (England) Regulations 2025.

Relevant document: 33rd Report from the Secondary Legislation Scrutiny Committee

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

My Lords, these regulations were laid before the House on 10 July 2025. The Government are committed to the remediation of residential buildings with unsafe cladding in England. Our remediation acceleration plan sets out how we will remove barriers so that buildings are fixed faster. Crucially, this will allow residents to be and feel safe in their homes.

The Government have already committed £5.1 billion of taxpayers’ money to the cost of remediation. We want to protect leaseholders and residents from further costs that are not of their making. The building safety levy is an essential step in achieving this. The purpose of the levy is to fund the Government’s building safety remediation programme. We estimate that we need to raise around £3.4 billion over 10 years. The draft regulations enable the levy to be imposed. The levy will be charged on certain building control applications for new residential floorspace in England. Subject to the approval of the Committee, it will start being charged from 1 October 2026.

Local authorities will collect the levy on behalf of central government. They are well placed to carry out this role as custodians of local building control, with tax collection expertise. I thank local authorities for the vital role they will play and for the steps they are already taking to prepare. My officials are supporting local authorities to ensure that they are ready for the levy launch. We will provide collecting authorities with grant funding for set-up costs. All ongoing costs will be recoverable from the levy revenue received.

The levy provides essential funding to deliver a safe built environment that meets residents’ needs. It complements our broader housing goals, including the delivery of 1.5 million high-quality homes over this Parliament. The levy is designed to minimise detrimental impact on housing supply while securing the required revenue. To achieve this, there are different levy rates for each local authority, which reflect local house prices. This protects viability in areas where house prices are lower. The differential rates are set out in the instrument. Development on previously developed land will benefit from a 50% discount rate. This discount compensates for the often higher cost of developing this type of land, ensuring that more sites remain viable.

The Government are committed to getting Britain building again. Small and medium-sized builders play a crucial role in driving up housebuilding rates but have faced significant challenges in recent years. In fact, just before I came here, I had a very interesting meeting with a round table of SME builders, so I know the immediate challenges they are facing. We are therefore helping SME developers by exempting developments of fewer than 10 dwellings from the levy charge.

Earlier this year, we announced the biggest boost to social and affordable housing investment in a generation. The building of more good-quality, affordable housing must be accelerated. With this in mind, all affordable housing is exempt from the levy charge. However, we have gone further, and any housing built by a non-profit registered provider of social housing is also exempt. Profits from sales of such homes are often reinvested into the provision of further much-needed affordable housing. Supported housing and other types of important community facilities, such as hospices and care homes, are also exempt from the charge. We will keep the rates and processes under review and will report at least every three years. With that, I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to the Minister for her explanation of this substantial SI. Although the formula on page 15 may have deterred the casual reader, I found the Explanatory Memorandum at the end a helpful summary of what is proposed.

I welcome the measure as it is a key part of the package proposed by the previous Government to fund remediation costs after the Grenfell tragedy. Although there is an element of rough justice here, in that developers which were not even around at the time of the Grenfell tragedy will have to pay, the alternative—the remediation costs in those cases where the developer was not remediating the building falling entirely on the taxpayer and/or the leaseholder—was even less palatable.

As the Minister said, this SI originates from the Building Safety Act 2022. At first sight, a delay of four years before it is introduced and a further delay before any money is paid are difficult to justify, given the urgent need to make progress with remediation. However, that does not matter; perhaps the Minister can confirm this. Although the taxpayer contribution is capped at £5.1 billion, the Treasury is, as I understand it, prepared to lend the department additional funds should that cap be reached; it will then recoup the money from future levies. As there is no sunset clause, the levy will remain in place until the Treasury is back in funds.

I have two main concerns about the building safety regime: the speed at which it is happening and the exemptions from the Building Safety Act. I made these criticisms of the previous Government, as noble Lords who were there may recall, and tabled amendments—unsuccessfully—to a variety of Bills. So there is nothing partisan about my remarks.

First, on speed, the department published its remediation portfolio dashboard showing the position as at the end of August this year. Of the 5,554 buildings covered by the Act—buildings are still being uncovered—35% had had their work completed and 14% had work under way. This means that, more than eight years after Grenfell, work has not actually started on over half of the buildings at risk.

The dashboard does not label this as “work not started”. Instead, there is a Whitehall euphemism describing it as “in the programme”. The next time my wife asks me why I have not unloaded the dishwasher, I will say that it is in the programme. Seriously, though, this means that thousands of people are still trapped in unsellable homes with unsafe cladding and fire safety defects, often with high service charges and high insurance—

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[Lord Jamieson (Con)]

In programme was the phrase; well, we need “in action” rather than “in programme”. We welcome the levy. It has been designed with care and certain exemptions are in place, particularly for smaller developers, social housing providers and community- focused schemes. Those exemptions are vital and they ensure that the supply of affordable and socially beneficial housing is not inadvertently undermined.

The Secondary Legislation Scrutiny Committee’s findings are that the overall impact on house prices and supply is expected to be modest and that the administrative costs are proportionate to the revenues raised, but I want to come on to some of the issues that were raised by my noble friend Lord Fuller. There are two aspects to this: the first is the safety of the people who are in unsafe buildings, which is crucial; the second is that we need to ensure that we are still building buildings for people who do not have a place to live.

Concerns raised by the National Federation of Builders and others about the cumulative impact of regulatory pressure on housebuilding should not be dismissed out of hand. This has its greatest impact on London. My noble friend gave a number of statistics, but Molior’s current analysis suggests that only 15,000 to 20,000 homes will be under construction in London in January 2027. That compares to a target of 82,000 and that was a reduced target. There are 185,000 people living in temporary accommodation in London and over 350,000 in the UK. We need homes, and we need to ensure that whatever we do helps to deliver new homes in a safe and meaningful way, and that there is no cumulative impact from this.

The second part of this—the resourcing and performance of the building safety regulator—is really important. Since July 2024, over 2,000 applications have been submitted for building control at gateways 2 and 3. Of these, 283 have been approved, 670 have been either declared invalid or rejected and 997 are still awaiting approval. Those are delays to buildings. In fact, Building Magazine estimated that one in four that hit stage 4, which is the final approval, are not yet approved: that is hundreds of empty apartments that could be occupied. Therefore, I am again seeking assurance from the Minister on what will be done to speed up the building safety regulator. As my noble friend Lord Fuller also said, the process is somewhat complex; how can we make it more transparent and accessible, so that we can get stuff done more quickly?

Delays or bottlenecks at this stage are slowing down vital safety work and much- needed development alike. As my noble friend Lord Fuller raised, the cash flow impact means that schemes become increasingly unviable, and I have heard a developer say, “We are not starting with this”; not because they are not willing to build safe buildings, but because of the financial risks of unforeseen and unnecessary delays in trying to get through the building safety regulation scheme, and because banks are charging increased interest rates because of that risk to developers. Getting this right is a win-win: we will have more safe buildings and more homes for people. We need to take that into account.

I would like to take a moment to reflect on the wider context. The Grenfell Tower fire was more than eight years ago, and it continues to cast a long shadow in the profound systemic failings in regulation, in oversight and in the way residents’ voices were ignored. Progress has been made since that tragedy, but we must continue to push forward with urgency and determination. The promises made to affected communities must be honoured in full, and the culture that allowed such failures to occur must be permanently changed. In that spirit, we support the introduction of this levy. We believe it is a proportionate and necessary measure, and we will continue to hold the Government to account for how it is implemented. I thank the Minister for bringing forward these regulations and commend the work of all those across both Houses and across all parties who have contributed to this important legislation.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I am grateful for those very helpful contributions to this debate and for the broad support that these regulations have received from all noble Lords who have spoken. I completely understand the stress and emotional upset that these issues have caused to all those affected by them, not least because I have a building in Stevenage called Vista Tower, which was profoundly affected by the issues. It was not a cladding issue, it was a different issue, but I have dealt with that over the years since those issues were discovered.

I agree with the noble Lord, Lord Jamieson, that for those affected by the Grenfell Tower disaster it has been a very long time indeed. We need to move things on as quickly as we can, not just for all those who are still suffering from the impact of the building safety issues, but for those people at Grenfell who have very bravely and courageously, in my view, used the awful experience that they went through to champion the cause of others who have been affected. I hope we can accelerate this plan so that we can get through these issues as quickly as possible. Indeed, as all noble Lords have recognised, this building safety levy is part of the mechanism to help us do that.

I will pick up some of the individual points that noble Peers have made. If I miss any, I am sure they will stand up and ask me again or I will reply in writing.

The noble Lord, Lord Young, referred to Treasury support and the ongoing funding for this. Remediation funding is already being provided, and the levy launch date does not affect the pace of remediation, so we are not going to slow it down and wait for the levy to kick in. The Government are committed to remediating buildings as quickly as possible, so levy receipts will cover the remaining remediation costs once taxpayer contributions, industry pledges and contractual obligations have been taken into account. It is our intention to keep going within an accelerating plan, not wait until the levy comes in to carry on with this work.

The noble Lord, Lord Young, referred to the scope of the levy. The scope of the levy does not imply responsibility on behalf of levy payers for historic building safety defects. I think the noble Lord was broadly supportive of putting this levy across the board. Developers have to make a full contribution to the overall cost of making buildings safe, reflecting the wider benefit that they derive from a well-functioning market and the substantial funding support the Government continue to provide to the housing market. So, it is being applied across the board.

The noble Lord, Lord Young, and other Peers mentioned the remediation acceleration plan. Clearly, eight years on from Grenfell there is no justification for any building to remain unsafe. Our goal is clear: to remove the barriers to remediation, to get buildings fixed faster and to allow residents to, at last, feel safe in their own homes.

An update on the remediation acceleration plan was published in July and outlined our plan to bring forward a remediation Bill in order to create a hard endpoint for remediation. A proposed legal duty to remediate will compel landlords to remediate buildings within fixed timescales or face criminal prosecution.

The RAP set timescales to provide greater clarity to residents on when they might expect their buildings to be remediated. As noble Lords have recognised, we expect that, by the end of 2029, every building over 18 metres in a government funding scheme will be remediated and every building over 11 metres with unsafe cladding will either have been remediated or have a date for completion, or else its landlords will be liable for penalties.

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[Lord Jamieson (Con)]

In the comment she just made, the Minister said that all buildings over 18 metres will be done by 2029 and that all buildings in the second category will, by 2031, either be done or have a completion date. The completion date could be one or two years away.

[Baroness Taylor of Stevenage (Lab)]

It is expected to be a reasonable date. We are not going to let people push it forward another 10 years, for example; that would be unreasonable.

I note noble Lords’ comments about the insurance industry. We continue to work with the insurance industry on this matter. I understand that this is a difficult issue.

The noble Lord, Lord Young, asked about non-qualifying leaseholders; I know that this matter has been a very sore point with such leaseholders. The leaseholder protections were designed to protect people living in their own homes. That is why the threshold was set at ownership of three properties in total: to distinguish between owner-occupiers and those who have made investment decisions. However, there is still substantial support. All leaseholders benefit where a responsible developer has been identified or where the freeholder is or was associated with the developer, and all leaseholders benefit from protections in relevant buildings if it is their principal home.

Where no responsible developer can be identified or made to pay, the cladding safety scheme funds eligible cladding remediation for buildings over 11 metres, ensuring that leaseholders do not face cladding bills. The law also allows for the recovery of costs for interim measures and expert reports via remediation contribution orders, placing costs with those responsible rather than residents. Even if some leases are non-qualifying—those for investment properties, for example —a leaseholder’s principal home on 14 February 2022 in a relevant building can still be a qualifying lease and benefit from protections if it meets the statutory criteria.

On the issues around construction product manufacturers, the power to charge the levy in the Building Act 1984 do not allow for it to be charged on construction product manufacturers. In February 2025, the Government published the construction products Green Paper, setting out comprehensive proposals for system-wide reform of that construction products regime. We are reviewing consultation responses, including on measures to introduce sufficiently robust sanctions, penalties and liabilities in order to hold economic operators, including construction product manufacturers, to account. The Government are committed to ensuring effective redress for manufacturer failings, whether they are historical or arise in future.

The cost of remediation must be shared equitably among those who have profited from or have an interest in the development and construction of unsafe buildings. It is unacceptable that some construction product manufacturers have not yet made a fair contribution to resolving this building safety crisis; I want to be very categorical about that. The Building Safety Act introduced new provisions in Sections 147 and 151 to enable developers, building owners and leaseholders to bring a claim against construction product manufacturers and suppliers where a product has been mis-sold or is inherently defective; Section 149 allows claims for historical defects where cladding products have rendered a building unfit for habitation. These provisions create redress routes where no direct contractual relationship exists.

Developers sit at the apex of the industry and are therefore well positioned to take the lead in funding and co-ordinating remediation works. Once they are complete, developers can seek to recover costs from the other parties involved in the supply chain. We are currently reviewing those sections of the Building Safety Act to make sure that the redress routes are robust, support effective cost recovery and promote accountability. We will provide an update on that later this year.

On the protection for buildings over 11 metres or five storeys—we have had this discussion before—evidence shows that problems with historical fire safety defects are concentrated in medium and high-rise buildings, where the risk to life tends to increase with height. By contrast, buildings under 11 metres typically present lower risks and can often be managed with other proportionate mitigations rather than remediation schemes. I know that there is a dispute with the insurance industry over that and, as I said, we continue our dialogue with it.

Leaseholders in collectively owned buildings are excluded from the leaseholder protections because the freehold is owned by some or all of the leaseholders, and the protections would therefore not have their intended effect. Collectively owned buildings are still eligible for the Government’s cladding safety scheme and the responsible actors scheme, and they can also bring remediation contribution orders against former owners, developers or associated persons. We are committed to reviewing how better to protect leaseholders from costs.

The noble Lords, Lord Fuller and Lord Jamieson, raised the pace of housebuilding and its impact. The levy has been designed to minimise potential housing supply impacts while balancing the need to raise the revenue required to make homes safe. All the issues raised with me at the SME round table I attended earlier this afternoon are already being explored and looked at, and I will continue that dialogue with those people. I have undertaken to give them some feedback.

Developers have had plenty of notice that the levy is coming and to include it in their viability plans. It was announced in 2021, and developers have had 15 months from being provided with the detailed design until the launch in 2026. Levy measures to minimise the housing supply impact—I mentioned these in my introduction—include variable levy rates at local authority level, the discount on developments on previously developed land, exemptions for affordable housing and developments of fewer than 10 dwellings. We expect that the cost of the levy will, in time, be reflected in the price that developers pay for land. Affordable housing is exempt from the building safety levy, and the Government are unlocking housebuilding at an unprecedented level. We have already taken urgent action through the planning reforms, which we will discuss next week, and through the £39 billion of investment for social and affordable housing.

I will make some comments on the building safety regulator because it is really important and noble Lords have mentioned it. Local authorities will administer the levy even when the building safety regulator is the Building Control Authority. The levy has been designed to minimise additional responsibilities imposed on the BSR. On 30 June, we announced a new phase for the BSR, including strengthening the leadership of that organisation, tackling operational challenges and moving it from the HSE to a stand-alone body. The building safety regulator has been open and transparent about the challenges of implementing a significant shift in the way building safety is now regulated in high-risk buildings.

The BSR has implemented a range of operational improvements, and it will recruit over 100 new staff to strengthen capacity by the end of the year. Over the past three months, the BSR has made major changes to improve the processing of gateway 2 applications, including a new fast-track innovation unit. Early indications suggest that the new model is working effectively. We expect the model to start to deliver improvements in processing times in the coming months, and we continue to commit to the highest standards of safety. The fast-track process is about refining a new system, not stepping back on commitments. I take the noble Lord’s point about the quality of responses; it is clearly not acceptable to send a response back with just “roof” written on it. I will take that back. His points about digital compatibility are well made. I will take those back and reply to him in writing.

On the payment point, I understand that the levy is paid at building control application, and in a major development that would probably be phased, so the building levy would be applied in that phased way. The noble Lord asked for a delay to the introduction, but developers have already had 15 months after being provided with the detail, so I do not think that that would be justified.

On the SME point, we are still consulting on the issue around medium-sized developments. I will respond in due course, once we have analysed those responses.

The noble Lord, Lord Shipley, asked about reviews. They can be more frequent—the minimum is three years—and there will be a continual review process. We need a balance, providing certainty with an ability to amend in the light of changing circumstances. We will continually keep this under review. In response to his question about PBSA, 30 bed spaces in PBSA are roughly equivalent to 10 dwelling-house thresholds, so that is why it has been set at that rate.

In conclusion, we think that the building safety levy is essential to fund the remediation of these historic building safety issues without further burdening residents and leaseholders, who have already suffered quite considerably through all this. The Government are committed to delivering 1.5 million homes to meet the country’s long-term housing needs and to unlock growth. That must work in parallel with our commitment to remedying the building safety failures of the past. The industry that contributed to such problems must pay to remedy them. The draft regulations set out a fair approach to collect the required funds, while ensuring minimal impact on housing supply and industry.

[Lord Jamieson (Con)]

The Minister very kindly commented on the improvements in the speed and transparency of the building safety regulator—that is very good. Is there a timetable of targets for how quickly it will turn around gateway 2, gateway 3 and gateway 4? I do not expect an answer now, but, if so, would the Minister be kind enough to write to us on that?

[Baroness Taylor of Stevenage (Lab)]

I thank the noble Lord for his comments. A new person—Andy Roe—is in charge of the building safety regulator. It would be helpful for me to ask Andy to draft a letter for noble Lords to set out our progress on making the BSR more effective.

Motion agreed.