Scotland’s building safety levy passes final hurdle with plans to raise £450m

Scotland’s building safety levy, which aims to fund £450m worth of necessary cladding remediation over a 15-year period, has passed its final test in the Scottish parliament.

Developers will have to pay a levy when constructing properties after Holyrood approved the bill yesterday (17 March).

The measure will enable the government to gather funds to remediate cladding on buildings without a linked developer.

The charge will come into effect in April 2028 – a year later than originally planned.

It will include the construction of new homes, student housing and build-to-rent properties.

Social housing and affordable housing will both be exempt, as will housing built on an island.

Under the measures, developers will not have to pay the levy on their first 29 homes every year, which will exempt some smaller firms from the charge.

CN understands the levy will be reviewed every three years to allow the Scottish government to assess whether it is on track to meet its cladding remediation targets, in light of economic conditions of the time.

The bill, which entered the Scottish Parliament last June, still requires royal assent – though the monarch has not rejected a bill in Scotland for more than 300 years.

Concerns have been raised about the levy, with Holyrood’s finance committee warning it could pose a “significant risk” to the housing market.

The committee’s convener Kenneth Gibson said it could impact the delivery of houses in areas where the “viability of building sites is already challenging”.

Scotland’s public finance minister Ivan McKee said the overall estimated cost of remediation work – including buildings with a recognised developer – will be between £1.7bn and £3.1bn over the next 15 years.

He added that the government has “stepped in to marshal the necessary work to protect and repair Scotland’s existing housing stock and to ensure it is properly funded”.

“To ensure Scotland’s public finances are sustainable, it is right that a contribution to these costs is made by the residential property development industry, just as they will be doing in England,” he added.

England is also pushing ahead with its levy, which is expected to come into force next spring.

In December, firms in England embraced proposals to exempt medium-sized home schemes from the levy, following warnings it would disproportionately affect smaller housebuilders and could lead to a reduction in housing delivery.