The Home Builders Federation (HBF) has written to the Chancellor of the Exchequer to highlight concerns over the impact of the proposed Building Safety Levy on housing delivery and to request that the Government reassess its approach.
In the letter, signed by more than 100 home builders, HBF expresses its deep concerns about the forthcoming levy, which is due to be implemented later this year.
Importantly, it highlights how the new tax, expected to raise £3.4 billion, is likely to severely hamper efforts to meet the Government’s target of delivering 1.5 million new homes during this Parliament, especially for small and medium-sized homebuilders (SMEs).
The letter notes that no formal impact assessment has been conducted to estimate the levy effect on housing supply and that work to more accurately assess how much the funding might realistically be required to collect from industry will only be carried out during 2025.
HBF draws the Chancellor’s attention to the financial burden the levy will place on developers, especially SMEs already struggling with rising development costs and burgeoning regulatory pressures.
HBF further points out the inequity of the proposed levy, noting that UK homebuilders have already contributed £6.4 billion towards building safety remediation efforts through a 4% precept on Corporation Tax, along with additional self-remediation commitments from over 50 builders. By contrast, product manufacturers, some of whom were heavily criticised by the Grenfell Tower Inquiry Phase 2 report, have yet to contribute any financial support.
The letter argues that the need for the new tax has not been clearly demonstrated, especially considering that more than £2.5 billion remains unallocated in the existing £5.1 billion Building Safety Fund, established over four years ago. It calls for a more thorough analysis before proceeding with the levy, calling for the Government to publish a robust impact assessment and consider how the tax will affect the delivery of both private and affordable homes.
The letter concludes by urging the Government to reconsider the levy, emphasising the need to support the home building industry, a sector that supports 750,000 jobs and generates £40 billion in economic activity each year, to continue to deliver not just new homes but also economic growth.
The Housing Forum said it is pleased to see the HBF raising concerns about the proposed building safety levy. This levy has no direct impact on building safety, and adds a further tax to the costs of housebuilding at a time when the sector can least afford it.
Shelagh Grant, Chief Executive of The Housing Forum said: “We are particularly concerned about the impact on affordable housing delivery. Around half of new social rented homes are cross-subsidised from market housing. If developers are having to pay a significant new tax on each home they build, affordable housing may become unviable.
“The Housing Forum published a report last year on The Cost of Building a House, which highlighted the range of costs that need to be covered by housebuilders. It now appears that the cost of proposed building safety levy may be higher than expected. The whole of the housing sector wants to work with government to deliver the 1.5 million homes over this parliament, including much-needed affordable homes. We support the HBF's calls on government to reconsider the impact of the levy.”
