Scottish Building Safety Levy to Impact Housing Development

The Scottish Government has confirmed that the Scottish Building Safety Levy will take effect on 1 April 2028. The levy will be charged upon acceptance of a completion certificate for new residential units, introducing a new cost layer for housing developers.

The levy is being introduced through the Building Safety Levy (Scotland) Bill, which completed Stage 2 of parliamentary scrutiny in February 2026. The primary objective is to fund remediation of unsafe cladding in existing buildings under the national cladding remediation programme. The government estimates annual revenue of approximately £30 million.

The Scottish levy mirrors a similar scheme being introduced in England from October 2026 but will be administered by Revenue Scotland rather than local authorities.

Liability will fall on the building owner at the time of submission of a completion certificate or application for temporary occupation. This effectively transfers the cost to residential developers rather than homeowners.

The levy becomes payable when the completion certificate is accepted or temporary occupation is granted. Payments will be calculated per accounting period, typically aligned with the financial year ending 31 March.

The levy applies to new units intended for use as dwellings or other accommodation, including student housing and rental developments. Hotels are excluded.

Affordable housing delivered under the government’s programme and social housing let under secure tenancy arrangements will be exempt. However, build-to-rent developments will remain within scope despite industry concerns.

Scottish Ministers will have powers to introduce a levy-free allowance for developers. The threshold of levy-free units has been increased from 19 to 29. Variable rates may be introduced across different local authority areas and land types. A 50% relief for residential development on brownfield sites has also been included.

The levy will be calculated based on floor area measured in square metres, multiplied by a rate yet to be announced. Levy rates are expected to be published in June 2026.

Developers have raised concerns about viability and cash flow timing, particularly given the significant upfront investment required in residential schemes. The absence of a fixed sunset clause creates uncertainty regarding the duration of the levy.

As experts from International Investment report, the Scottish Building Safety Levy introduces a new structural cost to residential development, and its long-term impact will depend on rate levels and how effectively policymakers balance remediation funding with housing market stability.