The Building Safety Levy (Scotland) Bill (“the Bill”) was introduced in the Scottish Parliament on 5 June 2025. The Scottish Government has advised that, if enacted, the Building Safety Levy (the “Levy”) will be charged on the construction or conversion of residential property developments, with some exceptions and used to help fund the Scottish Government’s Cladding Remediation Programme. The Levy is intended to come into effect on 1 April 2028.

Committee Findings

In line with usual Scottish Government process, the Bill was referred to the most appropriate parliamentary subcommittee for initial consideration – in this case, the Finance and Public Administration Committee. In December 2025, the Committee provided its report on the Bill and – for the first time in the history of the committee – made no recommendation on the general principles of the Bill.

The Committee advised that it was “unconvinced” that the Scottish Government had fully considered how the Levy would impact on the national housing emergency which it has declared. The Committee made a number of recommendations and findings including that:

  • It thought there was a strong case for exempting rural areas from the Levy.
  • It was concerned about the potential for the Levy to contribute to the loss of historic buildings in Scotland.
  • A sunset clause should be introduced to ensure that the Levy was reviewed after fifteen years to confirm it was operating effectively and to consider whether it should remain in place.

One of the key conclusions from the Committee was that it understood “the Scottish Government’s intent but believes that the introduction of the levy carries significant risk. We have concerns regarding the potential impact of the levy on the housing market and on the delivery of houses in areas where the viability of building sites is already a problem.”

Scottish Government Response

The Scottish Government responded to the Committee on 6 January 2026. Whilst it thanked, the Committee for its consideration of the Bill and its recommendations, it reiterated its commitment to the Levy, noting that the Government’s view was that it would be deeply unfair for the cost of Scotland’s Cladding Remediation Programme to be wholly borne by the general taxpayer and that – as has happened in England – developers would be required to contribute to these costs. In particular, the letter noted that:

  • The Scottish Government felt that the proposed revenue target of £30 million per year was relatively low compared to the value of the new build housing market (which it placed at circa £4.6 billion), meaning that it thought the impacts of the Levy would be low.
  • On the potential exemption for rural areas, the Scottish Government was content that the proposed combination of:
    • an exemption for the Scottish Islands, which will be expanded to cover areas that currently receive a 100% relief on non-domestic rates;
    • an annual allowance for tax-free units (currently intended to be set at nineteen per taxpayer); and
    • the generally smaller scale of rural developers

were sufficient to deal with these concerns.

  • The Scottish Government has committed to publishing indicative rates for the Levy in June 2026 which it says, will give almost two years for the industry to prepare for the legislation. An updated impact assessment will be published alongside the rates.

Next Steps in the Parliamentary Process

A Stage 1 debate (to approve the general principles of the Bill) took place on 8 January 2026 to consider and decide on the general principles of the Bill, with the Bill passing by 65 to 54. The Bill has therefore passed to Stage 2 where detailed consideration of the Bill will take place. The deadline for MSPs to submit amendments to the Bill is midday on Wednesday 4 February 2026, with amendments being considered and debated on 10 February 2026. It will be at this stage where we see whether any significant changes or concessions will be made by the Scottish Government.

Conclusions

It seems clear that the Scottish Government remains committed to pushing forward with the Levy in one shape or another. There will be pressure on to have the Bill passed before May’s election, but some work still requires to be done.

Contributor

Eric Johnstone

Legal Director