The introduction of the Building Safety Levy across Scotland, as well as in England, could threaten housing delivery and lead to the loss of SME housebuilders and developers, new research suggests.
This comes as Scotland prepares to follow the UK Government’s lead in implementing a Building Safety Levy, similar to the levy introduced in England under the Building Safety Act 2022, which is expected to bring in a revenue of £3bn over 10 years.
However, recent research of 100 UK housebuilders found that over half (56%) say that the levy, which will enforce larger contributions to planning authorities for remediation work, will create a barrier to future housing delivery.
Furthermore, 62% believe that the levy will detract people from joining the industry and almost two thirds (65%) believe that the levy will not only deter SME housebuilders from joining the industry, but could also lead to the loss of more existing businesses, too.
The concern is that, amidst a difficult housing market and a need to adapt to a changing regulatory landscape, firms will be expected to make larger contributions to address previous building safety defects.
While this is the most recent development for UK housebuilders when it comes to building safety legislation, last year, under the act several regulations came into force that will also affect builders and developers across the UK.
However, the research, recently commissioned by Polypipe Building Products, found that half (51%) of UK housebuilders do not believe that the Building Safety Act will affect them.
While it is true that the legislation principally focuses on Higher-Risk Buildings (HRBs), which are classified as residential blocks of 18m tall or seven storeys high, the Act is designed to protect residents and homeowners and applies to work on all residential dwellings.
Therefore, in addition to the introduction of the new levy, there are also implications on the type of insurance and warranties that housebuilders and developers will need to take out. Under the Act, New Build Warranties will increase from 10 to 15 years from the date of purchase and must be provided to purchasers of freehold purchasers with a lease of 21 years or over.
In addition to this, the warranty will not only apply to new builds, but also to refurbishments and conversions, which must also be backed by insurance.
Despite the challenges, the industry does not oppose the new measures. In fact, 59% of housebuilders say that despite the challenges ahead, they encourage any reform that will ensure safety hazards in buildings are eliminated.
Commenting on the findings, Hayley Hayes, Head of Specification at Polypipe Building Products said: “Building safety legislation, and the protection of homeowners and residents, is of the utmost importance to the housebuilding industry. However, while the industry backs reform to enhance this, many also share concerns about what the legislation means for their future.
“The UK housing sector is facing numerous challenges and, to navigate this difficult landscape, local governments and the wider supply chain need to support housebuilders and developers in complying with updated regulations while working towards ambitious sustainability targets – all while in a difficult economic climate.”
Overall, the research found that there is widespread misunderstanding around some elements of the Building Safety Act, with over half labelling the gateways as ‘confusing’ and ‘unclear’ and almost two thirds (65%) of housebuilders saying that meeting the legislation will be ‘extremely challenging’.
Hayley continued: “While we all want to build safely, it is no surprise that many firms are facing uncertainty and there is clear confusion around some of the legislation too. With a rapidly evolving regulatory landscape, businesses require support, education and access to good quality product information and resources to help them remain abreast of the changes and ensure compliance.
“Trade bodies, places of education, employers and manufacturers all need to do their bit to aid the transition.”
“As we navigate the new – and recent changes to – legislation, the technical team at Polypipe Building Products continues to work closely with housebuilders, developers, specifiers and contractors on CPDs and the provision of quality data to ensure they can move forward with confidence, work towards their targets and, ultimately, build safer homes for residents.”