Building Safety Act Update: October 2026

The Building Safety Levy came into effect on 1 October 2026. The levy applies to most new residential developments in England, subject to a range of exemptions including affordable housing, care homes and smaller schemes. A key change relates to the previously developed land (PDL) discount. The definition of PDL has been expanded to include hardstanding areas such as car parks and service yards. This should make it easier for developers to assess eligibility for the 50% levy discount and reduce inconsistencies between planning and building control processes. See our recent article, below, for more information.

The Building Safety Levy: What residential developers need to know now

The Building Safety Levy is moving from policy proposal to operational reality.

Introduced under the Building Safety Act 2022 as part of the government’s wider response to the Grenfell Tower tragedy, the levy is the next phase in the Government’s approach to the management of building safety within the built environment. It is intended to ensure that the cost of remediating historic building safety defects is borne by the development sector rather than by leaseholders or taxpayers.

For housebuilders, strategic land promoters, residential developers, build-to-rent operators and mixed-use developers, the levy introduces an additional cost and compliance obligation that sits alongside – and in addition to – existing planning obligations, Section 106 agreements and Community Infrastructure Levy (CIL) liabilities.

Applicability

The levy came into force on 1 October 2026.

It will be managed by local authorities as guardians of the building control process and will apply to developments:

1. identified as a “major residential development” (being new developments containing at least (1) 10 dwellings or (2) 30 bed spaces in purpose-built student accommodation; and
2. whose relevant building control applications and notices are submitted on or after 1 October 2026.

As such, the levy will apply to most residential developments in England, including:

• open-market housing developments
• apartment schemes
• build-to-rent projects
• mixed-use developments containing residential units
• residential conversion schemes
• change-of-use projects creating dwellings
• purpose-built student accommodation (subject to specific rules and thresholds)

Some categories remain exempt, including:

• affordable housing
• supported housing
• non-profit registered providers of social housing and their wholly owned subsidiaries
• care homes and nursing homes
• hospitals and certain healthcare accommodations
• domestic abuse refuges
• children’s homes
• certain military accommodation
• smaller PBSA developments falling below applicable thresholds

The trigger is linked to the building control process, not planning permission. This distinction is particularly important for developments currently progressing through technical design and pre-construction stages, where projects that have secured planning permission but have not yet reached the relevant building control stage may still fall within the levy regime.

Developers with residential schemes approaching the building control stage should therefore review projects now to understand potential exposure and to ensure that levy requirements are properly reflected in development appraisals, project documentation and delivery timetables. Particular care should be taken on phased developments, where earlier phases may sit outside the regime, but later phases may attract levy liability depending upon the timing of building control applications and commencements.

Who pays?

The regulations impose levy liability on the “named client” associated with the relevant building control application. In straightforward development structures, this is likely to be the developer, but liability can require careful consideration in joint ventures, forward-funded developments, development management arrangements and other multi-party delivery structures. In such circumstances, developers should ensure contractual documentation clearly allocates responsibility for levy compliance, information provision and payment obligations from the outset.

Calculation

The levy is calculated by reference to the gross internal area (GIA) of chargeable residential floorspace as set out in the RICS Code of Measuring Practice 6^th Edition. Chargeable floorspace includes communal areas used by residents, although special apportionment rules apply where communal space serves both exempt and non-exempt accommodation.

Rates vary by local authority and are intended to reflect local housing values, with the highest levy rates applying in areas with the strongest residential values, while discounted rates apply on previously developed land to reflect the viability challenges often associated with regeneration schemes.

For housebuilders operating nationally, levy liability may vary significantly across sites, making location-specific cost modelling increasingly important during site acquisition and appraisal.

For the purposes of calculation of the levy sum, developers will also need to provide to the relevant local authority prescribed levy information during the building control process (at the application/initial notice stage and commencement notice stage), including details of the relevant planning permission or application, dwelling numbers, exemption claims, brownfield status and chargeable floorspace calculations. Robust internal information management processes will therefore be as important as accurate cost forecasting.

The local authority will then calculate the levy due within 5 weeks (or 8 weeks in the event of a spot check), and this becomes payable on the earlier of the completion notice date or the first date of occupation.

The levy is a distinct cost from:

• the residential property developer tax (RPDT)
• Section 106 obligations
• Community Infrastructure Levy
• Biodiversity Net Gain requirements
• nutrient neutrality mitigation costs
• wider building safety compliance expenditure

Commercial implications

Key commercial implications for residential developers are likely to include:

• reduced development margins
• pressure on land values and option pricing
• additional due diligence requirements during acquisitions
• increased importance of accurate scheme measurement and exemption assessments
• potential impacts on funding structures and lender requirements
• additional administrative requirements throughout project delivery

Developers progressing large strategic sites or phased developments should pay particular attention to programme timing and building control milestones, particularly where later phases may fall within the levy regime even if earlier phases do not.

Compliance and enforcement

The levy isn’t simply an additional tax. It forms part of the wider building control process and has significant enforcement consequences.

Failure to comply may prevent the issue of the necessary completion documentation required for occupation, so developers could face delays to completions and sales programmes if levy obligations aren’t properly managed and discharged.

What should housebuilders be doing now?

As October 2026 approaches, developers should consider:

• auditing live and pipeline schemes to identify potential levy exposure
• reviewing delivery programmes to understand which projects may fall within the regime
• reassessing development appraisals and viability assumptions
• reviewing land acquisition models and site valuation methodologies
• evaluating availability of exemptions and reliefs
• updating funding and sales assumptions where necessary
• ensuring contractual arrangements properly allocate levy-related risk and responsibility

Early action is likely to be particularly important for developers with multiple sites at different stages of the development lifecycle.

 In other BSA news…

Our Real Estate Litigation team has successfully secured a landmark remediation contribution order (RCO) – this time in relation to Hallings Wharf Studios, Channelsea Road, London. The decision marks a significant development in understanding how Tribunals will approach RCOs under the Building Safety Act 2022 (BSA). And, notably, this is the first RCO obtained by the Secretary of State. For further information and a link to the judgment, see here.

MHCLG has announced an extension of the existing cladding safety scheme to buildings under 11 metres with serious fire safety risks, shifting remediation prioritisation from building height to risk level. MHCLG has updated its cladding safety scheme guidance to include information on funding for buildings under 11 metres. An 8 week application window  with applications to be made by responsible entities or their representatives  opened on 17 August 2026.

MHCLG has also announced plans for a new single construction regulator, simplification of the Building Safety Regulator’s Building Assessment Certificate process and a new consultation on emergency works.

The Building Safety Regulator (BSR) has announced it will move to a more intelligence-led, risk-based model for Building Safety Certificates. It will focus attention on organisations responsible for multiple higher-risk buildings, improving guidance, and providing greater support to smaller resident-managed organisations and applicants with refused or ongoing applications. The change follows longer-than-expected processing times and a high rate of application refusals, but the BSR has stressed the revised approach doesn’t reduce safety obligations.

The Almacantar Centre Point case was a surprising decision covered in this earlier Walker Morris briefing. In the case, the Upper Tribunal held that the protection against service charges for unsafe cladding remediation in paragraph 8 of Schedule 8  of the BSA applies regardless of when the cladding was installed, and isn’t limited to “relevant defects” as defined in section 120(2)  (which includes reference to the defects occurring in the 30-year period prior to section 120 coming into force). The judgment suggests that, when it comes to unsafe cladding, the BSA can reach back for more than 30 years. Along with the very wide approach to what constitutes a cladding system, this case gives the BSA a very broad reach indeed. The Court of Appeal is now due to hear this important appeal on 15 October. It’s definitely one to watch. We will monitor and report on developments.

In Mulalley & Co Ltd v Sto Ltd, the High Court has dismissed  the defendant German companies’ applications to set aside service out of the jurisdiction in three related claims, valued at approximately £90 million, concerning defective cladding on 18 high-rise buildings. The claimant developers are seeking to recover the costs of remedial works funded by  the government’s Building Safety Fund, bringing claims under the Civil Liability (Contribution) Act 1978. The case will consider the extent to which a cladding manufacturer should bear responsibility for remediation costs. It will be one to watch.

The Construction Leadership Council published new guidance in June 2026 addressing the Fire and Emergency File, the Building Regulations Compliance Statement, and an update to Guidance Note 01 for Higher-Risk Building applications.

The government is considering consistency, competence and accountability across the building‑safety system. It consulted, over the summer, on a new Building Professions Strategy. A separate consultation, expected later in 2026, should inform a new regulatory framework for built‑environment professions, trades and occupations, particularly those involved in high‑risk or safety‑critical roles. A full strategy is anticipated for spring 2027.

 A2Dominion South Ltd v BDW Trading Ltd confirms the meaning of ‘relevant building’ under section 117 of the Building Safety Act 2022 (BSA). The definition was important, in the case, for establishing the scope of an RCO in relation to flats in different sections of a mixed-use development. See here for the full judgment.

The judgment in Essendi Hotels v London Property Company, handed down in June 2026, features novel arguments concerning the cladding and fire safety issues of a commercially leased high-rise hotel. Finding for the tenant, the court held that standard commercial lease covenants imposed liability akin to that under the BSA, in respect of cat 3 ACM cladding panels. It’s an example of the court extending building safety/cladding liability beyond strictly residential property.

 The Welsh Government has published a collection of guidance on building control requirements for higher-risk buildings in Wales. A reminder that the new building safety regime in Wales came into force on 1 July 2026. See our recent briefing for what you need to know.

Looking for BSA expertise? Our BSA experts have got you covered.

Our Construction & Engineering, Housing Management & Litigation and Real Estate Litigation BSA experts are uniquely placed to help clients from right across the Living sector to successfully navigate all of the legal, regulatory and practical changes brought about by the Building Safety Act.

Our expertise includes long-standing experience and success in providing strategic risk management, transactional, and dispute resolution advice for industry participants in all areas of the sector, which has contributed to our in-depth understanding of all parties’ commercial perspectives.

Our recent appointment as the only firm instructed by the UK Government in relation to remediation orders also places us in a unique position to share information and advice with our clients, based on hands-on experience issuing this entirely new form of claim to address unsafe cladding/defects.

Meet the team, and please give us a call for further information, training or advice.