Angela Rayner delays her £3.4bn tax on new homes after housebuilders warn of ‘unviable’ sites

Angela Rayner has been forced to push back her controversial tax on new homes by a year after housebuilders warned it would cripple development and wreck Labour’s housing target. The Building Safety Levy, originally set for September 2025, will now take effect from autumn 2026 following fierce backlash from the construction industry.

The £3.4 billion levy was designed to fund cladding remediation on unsafe buildings, a response to the Grenfell Tower disaster. But developers argued the tax would place an unfair financial burden on all new-build homes, even those from firms that had never used dangerous materials. The Home Builders Federation (HBF) estimated the tax would add between £3,000 and £5,000 per property, making some sites commercially unviable.

Rayner’s Ministry of Housing, Communities and Local Government (MHCLG) admitted the levy could have “a small impact on housing supply”, particularly for developments already struggling with financial viability. The department insisted the delay would allow developers “around 18 months to factor levy cost into their financial planning”, but industry leaders remain deeply sceptical.

Steve Turner, executive director of the HBF, welcomed the delay but slammed the tax as “disproportionate”. He warned that when the levy does come into force, developers will reassess their plans and abandon projects they can no longer afford to build.

The setback is a significant blow to Rayner’s ambitious housing agenda. Labour promised to build 1.5 million homes by the end of the Parliament, a pledge the housing sector increasingly sees as unrealistic. Last month, Rayner insisted there were “no excuses” for failing to hit the target, telling the BBC: “We mean business on this.” But her own policy now risks directly undermining that goal.

The Building Safety Levy was originally conceived by the previous Conservative government in 2021 as part of efforts to make developers cover the costs of unsafe cladding removal. Labour doubled down on the policy, pledging to hold the industry accountable for the crisis. However, housebuilders argue that the sweeping nature of the tax penalises firms indiscriminately, forcing them to shoulder costs unrelated to their own developments.

The delay also threatens Labour’s wider cladding remediation plans. The Government has committed to fixing all buildings over 18 metres by 2029, with a target for those over 11 metres set for the same year. Critics fear the funding shortfall caused by the levy’s postponement could slow progress, leaving thousands of residents trapped in unsafe homes.

A spokesperson for MHCLG defended the decision, stating: “This Government is determined to make Britain’s homes safer by making developers pay their fair share to fix unsafe buildings.” They insisted the delay would “support developers to build safe homes” while allowing remediation work to continue under the Remediation Acceleration Plan.

However, with the housing sector warning of a looming slowdown, pressure is mounting on Rayner to revise her approach. If Labour’s flagship housing policy collapses under the weight of its own regulations, the party risks a major political embarrassment.

BBC

The UK government has postponed the Building Safety Levy until autumn 2026, following concerns from developers that it could stifle housebuilding. Initially planned for 2024, the tax aims to raise £3.4bn to remove unsafe cladding but has faced industry opposition.

Developers argue the levy—estimated to add £1,580 per home—threatens affordability and could reduce the housing supply. The Home Builders Federation warns it may lead to the loss of 70,000 affordable homes over a decade.

Housing Minister Matthew Pennycook defended the delay, blaming the previous government and insisting it wouldn’t slow safety efforts. However, critics argue that cladding manufacturers should bear more costs.

With 1,323 high-risk buildings still awaiting remediation, Labour’s manifesto pledged urgent action, but the delay raises questions about its commitment. The government insists that developers must pay their “fair share” while balancing housing growth.

CONSTRUCTION ENQUIRER

The government has announced new building safety levy rates, charging developers up to £10,000 per home in premium London boroughs like Kensington and Chelsea. The levy, now set to be introduced in Autumn 2026, will be based on square metres rather than per unit, despite industry calls for the latter.

Rates will vary by location, with brownfield developments receiving a 50% discount. For instance, a 100 sq m home on undeveloped land in Chelsea could cost £10,000, whereas in County Durham, it would be just £1,270. Most London projects on brownfield sites will face around £5,000 per home.

The government claims the levy cost will be absorbed by land prices rather than passed to buyers, though developers remain sceptical. The policy aims to fund post-Grenfell safety measures while giving the industry time to adjust. The full list of rates varies significantly across England.