Southeast housebuilders could be particularly badly hit
SME housebuilders are concerned they will be caught up in the new building safety levy to be introduced in September for cladding remediation, yet for-profit housing developments tied to the public sector will be exempt.
- For-profit housing built by housing associations will be exempt
- Sites of ten plus homes will be liable
- Fear that four per cent tax on annual profits of over £40m will be lowered to £10m
Housebuilders of smaller low-rise developments to be caught up in safety levy
SME housebuilders are worried their recommended changes to the building safety levy to make it fairer have been ignored by the government.
They claim it will cripple them financially and believe it’s unjust as they didn’t build high-rise blocks of flats yet registered social landlords who commissioned such homes are exempt.
National Federation of Builders, NFB, chief executive Richard Beresford said: “Any company, even if they have never touched a high-rise development or who will become new entrants to the housing industry, might end uppaying for the failures of others, including the Government’s.”
The trade body is worried their voice is not being heard by the Government who are planning to publish the new legislation in April prior to implementation in September.
NFB policy and market head Rico Wojtulewicz said: “The building industry’s recommendation is for the levy to only be brought in once all those responsible were in the scope of the levy.”
The NCB has recommended sites of up to 50 homes be excluded and that a five-year supplementary levy be charged to those responsible for building homes with unsafe cladding.
They fear the Government will stick to its earlier proposal that only sites of less than ten homes be exempt.
“If this is the case then it will result in few affordable homes, hinder companies from growing their businesses and investing in the broader industry, and discourage new entrants from joining the housebuilding sector,” said Mr Wojtulewicz.
Southeast housebuilders could be particularly badly hit
He added that larger regionalbuilders in the Southeast were liable to be caught by an additional tax in the levy of four per cent on profits exceeding £25m a year.
“There was a rumour that this may be reduced to £10m which is not a lot for builders operating in London and the Southeast.
Brokers Hank Zarihs Associates said development finance lenders were concerned the building levy could lead to more SME builders leaving the sector. The brokerage said this would be a major blow to the government hitting its target of 1.5m new homes built by 2030.
The levy is expected to raise £3bn over the next decade for developers to pay for remediation of building safety defects, including replacing unsafe cladding.
It was first announced in 2021 in response to the Grenfell Tower disaster where 72 people lost their lives in the 24-storey block in 2017 due to unsafe cladding intensifying the fire.
LinkedIn Question: What changes could the government make to the building safety levy to make it fairer?
