The Building Safety Levy in Scotland and England: key developments and considerations

The introduction of a building safety levy is progressing in both England and Scotland, with each jurisdiction developing parallel but distinct frameworks. The levy is intended to raise funds to cover the costs of making buildings safe, particularly in the wake of incidents like the Grenfell Tower fire. It aims to ensure that developers contribute to the costs of rectifying safety issues in buildings they have constructed.

This Law-Now summarises the current position, anticipated timelines, scope, calculation methods, and enforcement mechanisms for the levy as they relate to Scotland in comparison to the approach being taken in England.

English and Scottish approaches: divergence and devolution

In late 2024, the UK Government devolved the power to introduce a building safety levy in Scotland to the Scottish Government.  While both jurisdictions are moving forward with similar objectives, there are notable differences in their respective targets and potential implementation.  The UK Government aims to raise £3 billion over a ten-year period, with the levy coming into force in Autumn 2026.  In contrast, the Scottish Government is targeting approximately £30million per year, the bill was introduced to the Scottish Parliament on 5th June to be enacted in 2026 with the levy coming into force in from 1 April 2027.

Responsibility for paying the levy

The responsibility for paying the levy falls primarily on developers. In England, it is intended to capture those who are responsible for carrying out the development of new residential buildings or converting existing buildings to residential use.

In Scotland, the person liable to pay the levy is the owner of the building on the date of either (a) the submission of a completion certificate, or (b) the application for the grant of permission for the temporary occupation. If more than one person owns the unit, then the levy is payable jointly and severally, that is in whole or in part by any owner.

Scope of the Levy

The scope of the levy in both England and Scotland is broadly aligned, focusing on new residential developments and purpose-built accommodation.  In England, the levy will apply to:

• All new dwellings and purpose-built student accommodation requiring a building control application, subject to certain exemptions. 
   
• Exemptions include affordable housing, non-social homes built by not-for-profit registered providers, NHS hospitals, care homes, supported housing, children’s homes, domestic abuse shelters, accommodation for armed services personnel, criminal justice accommodation, and developments of fewer than ten units.

In Scotland, the levy will apply to:

• New residential units consisting of a wholly constructed or converted dwelling or part of a constructed or converted building intended to be used as a dwelling. This will apply to new homes built by developers for onward sale, new purpose-built accommodation, such as student flats and build-to-rent properties and the redevelopment of existing buildings to provide accommodation.

The Scottish levy will not apply to:

• Hotels, care homes, supported housing, children’s homes, hospitals or hospices, accommodation for armed services personnel, residential accommodation for school pupils, homes for ministers of a religious denomination, monasteries, nunneries or similar and accommodation for the provision of support of asylum-seekers and dependants.
   
• An “exempt new residential unit”: a building or part of a building which, on the building completion date:
  • does not increase the number of dwellings within the property (if it is a pre-existing residence that immediately before the construction or conversion works consisted of one or more parts which were (or were suitable for use as) dwellings);
  • are considered to be social housing within the meaning of the Housing (Scotland) Act 2001;
  • are considered to be affordable housing, that is a building or part of a building for which construction funding has been provided under sections 1 or 2 of the Housing (Scotland) Act 1988 or section 92 of the Housing (Scotland) Act 2001; or
  • is situated on an island.

It is not yet known whether the levy will apply to Scottish projects that are already underway at the time of implementation or whether a grace period will apply.

Calculation of the levy

In England, the amount payable will be determined by the floorspace of the development, with rates set per local authority area to reflect regional house price variations.  Developments on previously developed land will benefit from a 50% discounted rate.

In Scotland, the levy shall become payable on the building completion date – meaning the earlier of:

• acceptance of a Building (Scotland) Act 2003 compliant completion certificate, or
   
• the grant of permission for temporary occupation of the building.

The person liable to pay the levy will be the owner of the new residential unit at the earlier of:

• the date a submission of a completion certificate is made to a verifier, or
   
• the date when an application for a grant of permission for temporary occupation is made.

Further regulation is expected in Scotland, setting out the rate (or rates) of the levy, and whether this will differ by geographic area, different types of land or any other factor. However, the Bill does confirm that this rate will be multiplied by the area in square metres of the floorspace of the unit to determine the amount payable.

Sanctions and Enforcement

Enforcement mechanisms also differ between the two jurisdictions. In England, non-payment of the levy will result in the withholding of a building control completion certificate or rejection of a final certificate.  As these certificates are legally required for buildings over 18 metres in height and are often necessary for mortgage lending, non-compliance could significantly impede the sale and occupation of affected buildings.

Details of the enforcement regime in Scotland are still under development. The Scottish Government is considering a system based on a Compliance Plan, to be submitted at the pre-warrant stage and again at final warrant approval. The Scottish Bill introduces a range of penalties for failures, such as not making returns, not paying the levy, inaccuracies in documents and failure to register.

Conclusion

While the building safety levy frameworks in England and Scotland share common objectives and broad scope, key differences remain in their implementation timelines, calculation methods, and enforcement mechanisms.  Developers and stakeholders should monitor legislative developments closely as moves are made toward introducing the necessary legislation in 2026.