Draft Building Safety Levy (Amendment) (England) Regulations 2026

I beg to move, That the Committee has considered the draft Building Safety Levy (Amendment) (England) Regulations 2026. It is a pleasure to serve under your chairship, Ms Jardine. 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 to move on from this issue is crucial work. The Government are committing £5.2 billion of taxpayers’ money to the costs 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 10 years or more. 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. These draft amending regulations will 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 floorspace in England. It is important to note that developers have known about the levy since February 2021 and about its rates since March 2025, providing a significant lead-in period to plan for and incorporate the costs into their projects. The levy has been designed to ensure that the tax base remains wide enough to fund essential remediation, while protecting housing supply. The impact on the viability of new development has been kept as low as possible with rates that vary by local authority, indexed to local average house prices. There is also a 50% discount for brownfield sites. Social and affordable housing is exempt, as are small sites with fewer than 10 units. The levy will start being charged on new applications from 1 October 2026. We have been working closely with local authorities, private sector-registered building control approvers, and IT providers to support implementation ahead of commencement. I turn now to explaining the changes that the draft regulations will make. The Building Safety Levy (England) Regulations 2025 allow for development on previously developed land—often referred to as brownfield land—to benefit from a 50% discount levy rate. That recognises the higher cost of building on that type of land and protects the viability of development on 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 that car parks and other areas of hardstanding that would appear as previously developed could qualify for the discount. Our intention has always been to support the development of sites with those features, so the draft regulations amend the definition to make it clear where areas of hardstanding can qualify. That will better reflect the original policy intention and will, I hope, make it easier for local authorities and developers to understand which sites qualify for the discount, reducing costly and time-consuming disputes. The draft regulations and updated guidance provide more information about how the changes will work, and the instrument also makes a small number of minor technical amendments and corrections. The regulations do not change the fundamental design of the levy but provide clarification on previously developed land and make a small number of technical amendments to support implementation. We will keep the rates and processes under review, and will report on them at least every three years. I commend the draft regulations to the Committee.

It is a pleasure to serve with you in the Chair, Ms Jardine. I welcome the opportunity to sit opposite the Minister—I am pleased to be able to call her that—whom I congratulate on her appointment to the role. I warmly welcome her to her place and appreciate her remarks on the regulations. The Opposition stand alongside the Government—and, I am sure, with Members from across the House—in saying that building safety and remediation are critical tasks. We cannot be a world-leading economy or global power and still have citizens who live in—or, worse still, are trapped in—homes that have been rendered unsafe. People’s homes are the very places that they should feel safest. I therefore agree with the Minister on the need to make buildings safe, and I recognise that the building safety levy is intended to play a part in doing that. When assessing the regulations, we must consider the juncture at which we find ourselves. I was pleased to support plans for the Grenfell Tower Memorial earlier this year, and I welcomed the constructive tone adopted by Members from across the House and the value of the wider discussions about remediation and building safety during that debate. As the former Secretary of State, the right hon. Member for Streatham and Croydon North (Steve Reed), highlighted in that debate, Government figures show that work to remove and replace unsafe aluminium composite material cladding—the type used for Grenfell Tower—has been completed for 91% of high-rise residential and public buildings with such cladding, and remediation work at most of the remaining sites is progressing. That is good news, as is the fact that Committee members are here to discuss and debate how to complete that task. As I said, I recognise the role that the building safety levy is intended to play in that mission, which needs to be completed, despite the extensive progress made under the previous Conservative Government and under Labour Administrations since 2024. None the less, the Opposition have concerns about the levy and, more germanely, about the specifics of the regulations. Perhaps the most pertinent is the deep concern that I and many colleagues share about the potential impact of the levy on the building of more homes. As we have debated back and forth many times before, this country is currently in the midst of a significant housing shortage. The Government’s own impact assessment raised concerns about the viability of sites, as this additional cost is added to pre-existing development costs. The Minister is right to say that developers have known about the change for some time, but that will not mitigate the impact of the cost when it arrives. That is especially the case in areas where residential land value is lower, as the impact assessment highlights. The Government have previously stated that that is why: “Levy rates have been set such that rates are lower in areas where house prices are lower and viability is more stretched.” I do not believe that the levy in isolation will cause house building to grind to a halt, but I am deeply concerned that, when costs in many parts of the country are already too high, yet another cost to development takes us another step closer to a critical—perhaps even fatal—moment for house building. We must remember that the housing industry is already paying, among other things, a 4% surcharge on corporation tax, worth £2 billion; a voluntary self-remediation pledge, worth more than £4.1 billion; and reimbursements to Government funds, worth more than £700 million. Those totals, alongside other measures, are worth almost £7 billion—more than double the value of the funds expected to be raised by the levy. The Home Builders Federation examined the proposals and found that developers are staring at a potential average additional cost of £2,320 per unit when building new homes. In London, the increase amounts to more than £3,00. As the HBF stresses, that is on top of the myriad other average additional costs, including £10,220 per unit for the future homes standard, £2,000 per unit for the proposed changes to landfill tax rates, £5,700 per unit for biodiversity net gain, £7,700 per unit for building regulation costs, £2,055 per unit in taxes and £37,000 per unit for materials and labour. Inflation on relevant building materials has exceeded 40% since 2020, and labour costs rocketed after the employer national insurance hike was introduced. We in this place have a duty to ensure that everyone can live in a safe and decent home, and remediation is a critical aspect of that. If these costs continue to layer and swell, however, we will eventually bury the affordability of new homes beneath the unaffordability of the costs that come with building them. That is not just a fear for the future, but one that I worry has already joined us in the present in some parts of the country—not least here in London, where new housing starts over the past two years are at negligible levels, despite record levels of housing demand. The Minister, who is like me, a Greater London MP, knows that to be the case. I acknowledge that safety, affordability and viability are a difficult triumvirate to harmonise, but the Government are on track to miss their target by up to 400,000 homes across the lifetime of this Parliament, so it is clear that something must be done differently. Finally, I turn briefly to an issue that I believe cuts to the heart of future viable housebuilding in the UK: brownfield development, which the Minister touched on. I welcome the fact that the draft regulations recognise the importance of getting more homes built on previously developed land, especially as that has not always been recognised by Labour Members. The Opposition acknowledge that a 50% reduction in the levy for brownfield sites is a positive step on paper. However, the definition of brownfield land under the national planning policy framework means that 75% of it must be previously developed, while these draft regulations now clarify the treatment of fixed-surface type infrastructure and unlawful operations, and exclude from the definition wholly underground buildings and underground parts of buildings, That leaves me concerned that we will see fewer buildings falling under the scope of brownfield land, and therefore fewer buildings benefiting from the rate reduction. I look forward to the Minister’s clarifications on that point and on my concerns about the potential impact on house building. As I have said throughout these discussions, it is vital that all sides of the House work together towards a constructive, viable and affordable system of house building and remediation. That is essential for a safer future and safer homes, for the ownership and security of personal welfare, and for a fairer system in a modern society in which we never leave a single one of our constituents living in a home they know is not safe and secure.

It is a pleasure to serve with you in the Chair, Ms Jardine. I congratulate the Minister on her appointment and welcome her to her place. I rise to restate the Liberal Democrat commitment that no leaseholder who has found themselves subject to cladding remediation costs for which they were not responsible should shoulder those costs without access to remediation. We support these amendments to improve the 2025 regulations, but there is a bigger question about other buildings. High-risk buildings need to be addressed first, as the shadow Minister said, but there are none the less residents in buildings under 11 metres tall and in buildings whose standard does not meet PAS 9980:2022, which means that they continue to live in buildings with flammable cladding. Although that cladding would last an hour, so it is safer for them to escape, it is not a standard recognised by insurers, who expect buildings to be built to building regulations. Thousands of leaseholders are potentially in that position, and many of them cannot get insurance—except at very high cost—and cannot sell their properties. I invite the Minister to comment on how the funding towards the building safety regime can be widened beyond the levy, and to confirm that the Government will bring forward proposals in their remediation Bill to tackle the cladding manufacturers, which have been largely responsible for the crisis since it began.

I thank the Opposition for their positive contributions to this debate. In that spirit, we need to continue to work across parties to address this important issue. The shadow Minister asked about viability, a key issue that continues to come up. As he mentioned, we both serve as London MPs and see the impact across London and right across the country. It is important to recognise that the levy has been designed to minimise potential housing supply while also balancing the revenue required to make homes safe. The measures include variable rates to local authority levies and a 50% discount on developments on previously developed land, reflecting the additional costs of building on those sites. As I highlighted in my opening remarks, affordable housing is exempt from the levy, which should help to bring forward new housing supply. On average, the levy charge represents 1.1% of house prices on non-previously developed land, and 0.55% on previously developed land. It is therefore expected to have only a very small negative impact on supply. As I also mentioned, the levy was announced in 2021, so the sector has known about it for some time. We appreciate that many issues outside the sector and outside the Government’s control, whether locally, nationally or internationally, are having a big impact on developers, but it is important that they continue to price this work into the deals that they are doing.

I think the Minister misspoke. She said that the regulations had been designed to minimise housing supply. I am not sure that that is what she meant.

I thank the shadow Minister for highlighting that. I should have said that the levy has been designed to minimise potential housing supply impact. The shadow Minister asked whether the levy could have an impact on our ambitious target—rightly so—of reaching 1.5 million new homes. We continue to work closely with the housing market to look at supply. We are committed to working with the industry to ensure that homes continue to be built at pace. This issue comes up in my inbox, as it does for many hon. Members—it is not isolated to London. It is important that we build good-quality homes. The shadow Minister also highlighted the impact that the measures could have on innocent homeowners, who should not be burdened with the cost. I thank him for agreeing that the cost should not be placed on them. It is right that developers and house builders be responsible for it, in order to protect innocent homeowners. The Lib Dem spokesperson, the hon. Member for Taunton and Wellington, highlighted an issue on which many of us have campaigned for many years: ensuring that innocent leaseholders and homeowners are not responsible for paying the levy. Many of them struggle with housing costs and the cost of living crisis on a day-to-day basis. It is important that developers have a way to fund the levy with no additional cost to the taxpayer. The Lib Dem spokesperson asked about properties that fall out of scope. We will continue to identify those properties and work with the sector to highlight other ways of supporting them, in order to ensure, again, that costs are fairly shared across the market.

On a point of further clarification, I hope that the Minister agrees that one reason for broadening the scope of funding for the safety regime so that it includes cladding manufacturers is that in constituencies such as mine in Somerset, there are no high-rise buildings at all—indeed, most of Somerset has no high-rise buildings—but all the developers in Somerset will none the less pay for remediation in the big cities. None of us begrudges the importance of paying for that remediation, but I hope that that example illustrates the importance of widening the funding of the regime so that cladding manufacturers are required to contribute.

As I mentioned, we will keep under review the process and, importantly, the rates, and we will report back to the House every three years on those key areas. The building safety levy is essential to fund the remediation of historic building safety issues without further burdening residents and leaseholders. The draft amending regulations before the Committee are designed to support this work and make the levy work more efficiently, in accordance with our initial intention to support redevelopment of brownfield sites. They are intended to correct drafting and improve clarity and consistency of process for developers and local authorities, rather than alter the underlying policy design of the levy. The Government are committed to delivering 1.5 million homes in this Parliament to meet the country’s long-term housing needs and unlock growth. That mission must work in parallel with our commitment to remedy the building safety failures of the past. We expect the development industry to contribute to our work making buildings safe for those who live in them. I commend the regulations to the Committee. Question put and agreed to.