HBF says levy is 鈥渘akedly anti-development鈥 and will result in fewer homes being built
The Home Builders Federation (HBF) has written to the chancellor to call for the forthcoming 拢3.4bn building safety levy on new housing developments to be reconsidered.
The letter, which is signed by more than 100 housebuilders, said the confirmation that the government will proceed with the levy 鈥渉as raised significant concerns from all areas of the new build sector鈥.
It said: 鈥淭his additional burden will result in many fewer homes, including affordable homes, being built and likely threaten the existence of some hard-pressed SME home builders.鈥
The levy, originally proposed by previous housing secretary Michael Gove, is expected to be implemented later this year. It will see developers pay a fee on new housing developments which require building control approval and is expected to raise 拢3.4bn over 10 years.
In its letter, the HBF said the levy was 鈥減alpably unfair鈥 given house builders have already contributed 拢2bn towards building safety through corporation tax and a further 拢4.4bn through voluntary self-remediation commitments, adding that product manufacturers and overseas developers active on high-rise developments in the UK have not contributed anything.
The letter said no formal impact assessment has been conducted to estimate the levy鈥檚 effect on housing supply. It also said work to more accurately assess how much funding might be required will only be carried out during 2025.
The letter argues that the need for the new tax has not been clearly demonstrated as 拢2.5bn remains unallocated in the existing 拢5.1bn 精东影视 Safety Fund.
It calls for a more thorough analysis before proceeding with the levy and the publication of an impact assessment to consider how the tax will affect the delivery of both private and affordable homes.
It said: 鈥淏ecause of the stance of the previous government and its general approach to development, it seems likely that the levy was devised and designed to reduce housing supply, particularly in parts of the country with the greatest housing affordability pressures. This levy on new homes will add thousands of pounds to the cost of providing each new home.鈥
It said the timing and process for collecting the new tax is 鈥減unitive鈥 as housebuilders will pay the levy at the point of the first home completion, meaning they 鈥渨ill be forced to pay what will amount to hundreds of thousands of pounds in additional taxes at the point of peak capital outflow on each site鈥.
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The letter says it is not too late to reconsider the levy, adding the government should complete the work to determine how much funding is needed for remediation and 鈥渂e braver鈥 in tackling product manufacturers.
The levy will be set at varying rates based on house prices in local markets and there will be a discounted rate for developments on brownfield sites.
A government spokesperson denied the levy will prevent the 1.5m homes target from being met. He added: 鈥淚t is right that we protect leaseholders and taxpayers from the costs of fixing unsafe cladding and that developers contribute their fair share.
鈥淭he 精东影视 Safety Levy was announced by the previous government and has been hard-wired into developer planning. We are working closely with industry on its design and will announce further details shortly.鈥
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