Press Releases

• SPF warns of disproportionate impact of proposed Building Safety Levy on SMEs, BTR and all forms of affordable housing
• Blanket application of the BSL risks pushing development viability to breaking point, resulting in fewer homes being built and investors looking elsewhere
• SPF solution is a series of urgent exemptions for SMEs, BTR and affordable housing, plus a more level-playing field for private and public capital investment into affordable housing

The Scottish Property Federation (SPF) has called for a series of urgent exemptions to be made from the Scottish Government’s proposed new Building Safety Levy (BSL) for SME developers, the Build to Rent (BTR) sector and all forms of affordable housing as Scotland continues to struggle to deliver new homes.

The call comes as part of the SPF’s response to the Building Safety Levy consultation on proposals by the Scottish government to bring forward a new levy on all new forms of residential development. The aim of the levy is to support the funding of the Cladding Remediation Programme, which addresses building safety concerns linked to unsafe cladding materials.

While the SPF support broader measures to improve building safety, it warns that the blanket imposition of the BSL now risks stalling Scotland’s already weak housing delivery pipeline by making more residential schemes unviable to deliver.

Central to the SPF argument is that the housing industry is already contributing via tax and voluntary means towards cladding remediation. This is in addition to the significant tax and regulatory contributions via s75 planning obligations towards affordable housing, transport, education, water, community and other necessary infrastructure.

With construction and financing costs continuing to be high, the cumulative impact of the BSL on top of the range of existing contributions will undermine the ability of the sector to bring forward critically needed new residential development.

Furthermore, warns the SPF, when combined with wider policy uncertainty around measures such as rent controls, it could lead investors to choose locations outside Scotland where development is deemed to be more viable which would represent a significant opportunity cost to Scotland.

In particular, the BSL could disproportionately impacts BTR developments because they generate no upfront sales revenue to offset costs, making the charge harder to absorb. BTR schemes are also large-scale, include significant communal space, and rely on long-term investment models that are highly sensitive to additional costs and policy uncertainty. This further risks eroding future supply of new homes, including affordable homes.

In addition, the SPF is also raising concerns that the exemption proposed for affordable housing only covers developments that are publicly funded, ignoring the increasingly important role of private capital investment in the delivery of affordable housing. This, the SPF believes, is misplaced and could drive away non-public investment in this crucially needed housing sector.

Robin Blacklock, Interim Director of the Scottish Property Federation, said:

“While we naturally support measures to improve building safety, and tackle some of the legacy issues associated with cladding remediation, the blanket application of this proposed levy during a declared housing emergency, at a time when development viability is already under severe strain, risks seeing many new homes being delayed or cancelled, thus worsening the supply shortage across all tenures.

Given the disproportionate impact, we are urging the Scottish Government to exempt SME housebuilders, the Built to Rent sector, and all forms of affordable housing including mid-market and discounted rent model (provided by the private sector) from the BSL to avoid disincentivising critical parts of the housing market.

With construction and financing costs continuing to be high, the cumulative impact of the levy on top of the range of existing contributions will undermine the ability of the sector to bring forward critically needed new homes and could lead investors to choose locations outside Scotland where development is deemed to be more viable.”