The Scottish building safety levy – coming in April 2028

We have previously discussed the Scottish Building Safety Levy (“SBSL”) and its turbulent passage through the Scottish Parliament in our previous article. However, the SBSL has now become law, and will be effective from April 2028 following the enactment of Building Safety Levy (Scotland) Act (the “Act”). Whilst changes and concessions were made, the Scottish Government’s overall approach and desire to introduce the levy remained intact.

What is the SBSL and when does it apply?

The SBSL is a tax that will be charged on the construction or conversion of new residential buildings. The primary aim of the BSL is to provide funds to finance the Scottish Government’s cladding remediation programme.

This programme will undertake the work required to address fire safety risks in relation to “orphaned” residential buildings (that is buildings where no responsible developer can be found) in Scotland of 11m or more in height, which require such work. The programme’s costs are forecast to be between £1.7 billion and £3.1 billion across the next 15 years. The SBSL itself is predicted to raise £450million across fifteen years.

The SBSL will be charged on certain “building control events”. Building control events are defined as the construction of, or the conversion, of a “new residential unit”. The SBSL will apply on the “building completion date” which relates to the earlier of:

• the acceptance of a completion certification under section 18 of the Building (Scotland) Act 2003; or
• the grant of permission for the temporary occupation of the building under section 21(3) of the 2003 Act.

What buildings does it apply to?

For works to be considered “a new residential unit”, the building must either be;

• the whole of a constructed or converted building on which, on the building completion date, is intended to be used as a dwelling or other accommodation; or
• a part of a constructed or converted building which on the completion date is intended to be used separately as a dwelling or accommodation.

This definition will include Purpose Built Student Accommodation, student halls of residence and build to rent properties.

Exemptions

There are, however, a range of properties to which the SBSL will not apply. These include hotels and hostels, hospitals, hospices and other care facilities and army barracks.

In addition, to qualify as a “new residential unit”, the unit must not be an “exempt residential unit”. This definition covers situations where works are carried out to a building which previously contained residential units, but the overall number of units did not change, social housing to be let as a Scottish secure tenancy or a short secure tenancy, affordable housing and developments which are situated on a Scottish Island.

Developers will also have an “annual allowance” of 29 units which they can construct without having any liability in terms of the SBSL. This concession was introduced into the Act as it passed through the legislative process to offer protection to smaller developers.

Who is liable for SBSL?

The person that is liable to pay for SBSL is the owner of the new residential unit on the date on which the submission to a verifier of a completion certificate is made or the individual that makes the application of the grant of permission for the temporary occupation. It is anticipated that in most cases this will be the original developer.

What will the SBSL charge be?

The SBSL levy rates are still to be announced and enacted by the Scottish Government. These rates will be set by secondary legislation, with indicative rates scheduled for publication in June 2026, following the Scottish Government Election.

The Act notes presently suggests that there shall be different rates for different geographical areas and for different types of land. However, one thing which has been made clear by the Act is that the regulations which set the charges will need to give at least a 50% discount for development on brownfield sites.

Conclusion

Notwithstanding the concerns which were raised during the passage of the Act, the SBSL brings the Scottish development position largely into line with the position south of the border. Only time will tell whether sufficient changes have been made to address industry concerns, and what impact this will have on residential construction in Scotland.

If you have any further questions please don't hesitate to get in touch with our construction team or your usual Brodies contact.