The government has announced that Build to Rent developments will be included in its new building safety levy – although developments on brownfield sites will only be subject to a 50% charge. Receiving 107 responses, some respondents were in favour of charging the building safety levy – arguing that developers gain large profits from these types of developments.
Responses also included that it would be unfair to treat Build to Rent developments differently to for-sale properties. Some respondents highlighted that Build to Rent developers also compete for land with developers of for-sale properties, so if Build to Rent is excluded from the building safety levy, it would give Build to Rent developers a market advantage.
Others also felt that it was important to charge the levy on Build to Rent developments in order to maintain a broader tax base, lowering the average levy rate.
On the other hand, respondents who argued that Build to Rent developments should be excluded from the building safety levy did so on the basis that developers accrue profit over a longer time period, opposed to making a profit at the point of completion and sale of a property.
Sentiments amongst these respondents were that they felt that charging the building safety levy on Build to Rent buildings would put disproportionate financial pressure on developers, which could result in some sites becoming unviable and not being built out.
Some respondents also felt that Build to Rent should be excluded because schemes tend to be constructed in high density urban areas where housing demand outstrips supply, so there is a social function present in helping to alleviate housing shortages in these areas.
A few respondents also argued that it would be unfair to charge the building safety levy on Build to Rent developments as they do not form part of the leaseholder sector, so developers do not have access to government support for the remediation of building safety issues.
Following consideration from the government, it intends to include Build to Rent developments in the building safety levy. The government has stated that it understand the different profit models for Build to Rent compared to for sale, but as both sectors remain profit-making parts of the house-building sector, excluding Build to Rent would present a competitive advantage as both compete for land in the same way.