A new tax on housebuilders worth 3.4 billion pounds starts in four days. The government's own guidance and the law on the statute book still do not agree on who gets the discount.

By Kevin Yeandel

Published 27 September 2026 at 06:27

4/53 documented mistakes in this teardownHow ratings work

Estimated reading time: 6 minutes

A new-build block of flats around a courtyard car park in Haringey, London. — New housing at Watts Close, Haringey, London, the kind of development the Building Safety Levy will charge from 1 October 2026. Photo: John Kingdon / Wikimedia Commons, CC BY-SA 2.0.

In short. The Building Safety Levy, a new tax on residential developers worth an estimated £3.4bn over a decade, starts on 1 October 2026 [1] [7]. Ministers laid correcting regulations on 12 September, four weeks before commencement, because the original 2025 regulations contained drafting defects [1]. The correction's own Explanatory Memorandum says the department's guidance "will be updated to reflect the amendments made by this instrument when this instrument is laid" [2]. It already had been, months before the instrument existed, and the regulation still on the statute book today does not contain the fix. Three documented mistakes: four stars.

A tax with a correction slip, four days before it starts

The Building Safety Levy is the first tax ever imposed under section 105C of the Building Act 1984, a power inserted by the Building Safety Act 2022 [2]. It charges developers of new dwellings and purpose-built student accommodation, collected by local authorities, to help fund the £5.1bn the Exchequer has already spent from general taxation on post-Grenfell remediation; the government's own impact assessment puts the levy's target at "£3.4bn to be raised over c.10 years" (page 2) [7]. The underlying regulations, the Building Safety Levy (England) Regulations 2025, were made in November 2025 and come into force on 1 October 2026.

Four weeks before that start date, the Ministry of Housing, Communities and Local Government laid a second set of regulations to fix the first. The instrument itself is blunt about why: it "has been made in consequence of defects in S.I. 2025/1236" (page 1) [1], and its Explanatory Memorandum says plainly that the corrections are "considered necessary for the levy to operate as intended from commencement" (page 2) [2]. Among the fixes: a tighter definition of which sites count as "previously developed" and therefore qualify for a levy rate that is half the standard charge, and an earlier deadline for councils to tell a developer their building control application has been picked for a spot check [1]. Both instruments come into force together on 1 October.

The guidance got there first

Buried in the memorandum is a single line about the department's own public guidance: "Operational guidance relating to the Levy Regulations was published on 10 July 2025. This guidance will be updated to reflect the amendments made by this instrument when this instrument is laid" (page 5) [2]. Read plainly, that promises a future fix: the guidance is unamended today, and will be brought into line once the correcting instrument takes effect.

That is not what the guidance itself says. The live page's own metadata records it as published 10 July 2025 and modified 2 July 2026 [4], ten weeks before the correcting instrument was even made on 12 September. And the guidance already describes the corrected law, not the current one. Its section on levy rates states: "land is not PDL if: the building on the land is wholly underground... or any operations carried out in, on, over or under the land are not lawful" and that "any underground part of a building extending beyond a part of a building that is above ground is not taken into account for calculations for whether at least 75% of the land is PDL" [5]. Its section for local authorities states that "the collecting authority must notify the client of the spot check as soon as practicable within a 5-week period" [6]. Every one of those provisions is new law, only added by the correcting regulations laid on 12 September [1]. The department's own account of when its guidance would catch up with the law is simply wrong: it caught up before the law existed, and nothing in the memorandum discloses that.

What the law on the books still says today

The regulation actually in force right now, the Building Safety Levy (England) Regulations 2025 as made, does not contain any of the provisions the guidance already describes. Regulation 21(4), unamended, lists only four exceptions to "previously developed" land: use for agriculture or forestry, a most-recent agricultural or forestry use, mineral extraction, and waste disposal by landfill. There is no wholly-underground exclusion and no unlawful-operations exclusion; both are inserted for the first time by the correcting instrument [1] [3]. Regulation 49, unamended, requires a collecting authority to notify a developer of a spot check "as soon as practicable, but within the relevant period", where the "relevant period" is defined by regulation 46(3) as the whole determination period, which can itself already run to eight weeks once a spot check is under way [8] [9]. The firm "no later than the end of the period of 5 weeks" deadline the guidance already promises is a new substitution the correcting instrument inserts for regulation 49, not a description of the rule as it currently reads [1]. Both instruments commence together on 1 October, so the live gap between guidance and law closes on its own in four days. For the four days between publication of this piece and commencement, and for however many weeks before it the guidance carried this text unremarked, a developer reading only the regulations in force would have found a materially looser test than the one the department's own guidance told them applied.

The claims, tested

The claim	What the record shows	Verdict
"This guidance will be updated to reflect the amendments made by this instrument when this instrument is laid" (EM, page 5) [2]	The guidance page's own metadata shows it was last modified 2 July 2026, ten weeks before the correcting instrument was made [4], and already contains the corrected text	The update the memorandum describes as pending had already happened, unacknowledged
Land is not "previously developed" if wholly underground or if operations on it are unlawful, and underground parts of buildings do not count towards the 75% threshold [5]	Regulation 21(4) of the Levy Regulations, as currently in force, lists none of these three exclusions [3]	Guidance and the regulation in force today directly disagree on who qualifies for the 50% discount
"The collecting authority must notify the client of the spot check as soon as practicable within a 5-week period" [6]	Regulation 49, as currently in force, sets no fixed 5-week cap, only "within the relevant period", which regulation 46(3) allows to run to 8 weeks once extended [9]	Guidance states a firmer deadline than the law currently in force actually requires

Credit where due

The correcting instrument is honest about its own reason for existing, stating outright on its first page that it was "made in consequence of defects" in the original regulations, rather than dressing up a substantive fix as routine tidying [1]. The memorandum is also candid that the department chose not to widen the levy's small-sites exemption despite consultation responses supporting it, citing "the relative prioritisation of fiscal interventions at this time" rather than staying silent on a live ask from developers (page 5) [2]. And the substantive change to the previously-developed-land definition was not sprung on anyone: the memorandum records "targeted engagement with a range of identified stakeholders, including developers, local authorities, Registered Building Control Authorities... and representative bodies" between January and March 2026, which is presumably how the guidance came to describe the fix months before the law did (page 4) [2].

Three documented mistakes. (1) The correcting instrument's own memorandum says its guidance "will be updated... when this instrument is laid", but the guidance's own timestamp shows it was already updated ten weeks before the instrument was made, a discrepancy the memorandum does not acknowledge. (2) The guidance's definition of land that qualifies for the levy's 50% discount already excludes wholly-underground buildings and unlawful land use; the regulation currently in force excludes neither. (3) The guidance already states a firm 5-week deadline for notifying developers of a spot check; the regulation currently in force sets no such fixed cap. Rated four stars out of five.

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