An overwhelming majority of small and medium enterprise (SME) house builders think the Building Safety Levy will make more development sites unviable, new research from the Home Builders Federation (HBF) reveals.
As the home building industry prepares for the imposition of a new charge on residential developments which kicks in on 1st October 2026, a survey of SME home builders across England found that 91% believe the levy will make developments financially unviable.
More than a third (36%) of house builders said they have already delayed, redesigned, or cancelled schemes in anticipation of the Building Safety Levy’s introduction.
HBF’s recent Viability Crunch report found that the cost of building a typical new home has increased by around £76,000 over the past five years. The Building Safety Levy accounts for £2,320 of this increase, alongside other taxes, levies and inflationary pressures.
Neil Jefferson, chief executive of the HBF, said: “The new levy, compounded by other rising costs, tighter margins and challenging market conditions, will make even more developments unviable. SME developers in particular are being forced to rethink investment decisions, delay sites and reduce output as costs continue to increase.”
“The home building industry is already making a substantial contribution towards the cost of remediating historic building safety issues, yet this levy places a further burden on developers who played no part in creating those problems.”
The HBF is calling on the government to pause the introduction of the Building Safety Levy.
More than five years on from its creation, the £5.1bn Building Safety Fund has allocated only around half of the funds available, with £2.5bn as yet unassigned.
Jefferson added: “We are urging the Government to pause the introduction of the levy and assess whether it is still necessary, particularly given the significant unallocated funding that already exists.”
