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Building Safety Levy: is the October deadline already changing development decisions?

ended 03. September 2026

The Building Safety Levy comes into effect in England on 1 October 2026, affecting qualifying new residential developments.

For an article for Bridging Loan Directory, I’m looking to hear from property developers, development finance lenders, brokers and other professionals directly involved in funding residential development.

With just a month until the levy takes effect, are you already seeing it influence schemes being appraised or funded?

In particular:

• Are levy costs now being included in development appraisals or funding applications?

• Is the additional cost changing viability, equity requirements, contingencies or the amount lenders are prepared to advance?

• Are developers accelerating building control applications ahead of 1 October?

• Have you seen any schemes repriced, redesigned, delayed or abandoned because of the levy?

Specific examples, figures or experience from live/recent schemes would be particularly useful.

Please make clear whether your comments are based on cases you are currently seeing or your expectations of what will happen after 1 October.

4 responses from the Newspage community

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Tony Sanchez
Founder at Bridging Loan Directory
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Iain Thompson
Director at Evolve Finance
With only a month to go, the 1 October Building Safety Levy is already causing a major restructuring of development appraisals. We are actively seeing these costs factored into live funding applications, and the impact on project viability is immediate.

Because development finance lenders calculate their leverage against a strict net profit margin, this additional regulatory cost is directly compressing developer margins. As a result, lenders are requiring developers to inject higher cash equity up front to cover the shortfall, as senior debt sizing becomes more conservative to protect against depleted contingencies.

We are seeing developers accelerating their building control applications right now to legally escape the 1 October threshold. The levy isn't completely abandoning schemes yet, but it is forcing an immediate repricing of land acquisitions. If a plot was optioned on pre-levy margins, the deal is being aggressively renegotiated.
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Nouran Moustafa
Practice Principal & IFA at Roxton Wealth
This levy is already changing the conversation because developers do not wait until a tax starts before pricing it in. If a scheme is going anywhere near building control after 1 October, the cost should already be sitting in the appraisal.

And this is where I get frustrated: Government keeps saying it wants more homes, then keeps finding new ways to make building them more expensive.

The levy varies by area and is charged per square metre, with brownfield rates generally set at half the standard rate. For a tight-margin SME scheme, that can mean more equity, less headroom and a lender asking harder questions about contingency and exit.

I fully expect some developers to accelerate applications before 1 October because pre-commencement applications are outside the levy.

My concern is cumulative damage. One levy may not kill a scheme. Add finance costs, Section 106, CIL, labour, materials and planning delays, and suddenly the homes Government desperately wants simply do not stack up.
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Chris Barry
Director at Thomas Legal
The building safety act has no doubt brought positive change and accountability but frustratingly the introduction of the act has dramatically increased the conveyancing process, increasing fall through rates at the cost of thousands to potential buyers. The levy will be another important point lawyers will need to check for buyers and lenders. This process will take more time and delay the process further, as we saw with the introduction of CIL back in 2016.