The Scottish Government’s consultation on its proposed Scottish Building Safety Levy (SBSL) is coming to a close, with a deadline of 15 August for comments.

As a reminder, the Scottish Government is hoping to raise up to £30m annually to complement public sector funding to support the Cladding Remediation Programme (which was estimated in June 2025 to cost £1.5-£3.1bn). The Bill to introduce the levy was published on 5 June 2025.

It is proposed that the SBSL will apply to all forms of new residential development from 1 April 2027. The levy is likely to be based on floor areas but with the rates being set to reflect local variations, (but with ongoing consultation on things like communal areas). It will be due at the point a completion certificate or temporary occupation permission is granted by the applicant – so will generally be the responsibility of the developer.

The Scottish Government officially declared a national housing emergency last year. If the old adage is right – “if you want less of something, tax it” – the introduction of the SBSL may stymie housing supply at a time when housebuilding needs to be ramped up. It will stick in the throat of developers being tarred with a wide brush, with no linkage between those who will be subject to the SBSL and those responsible for defective cladding.

In addition to all other forms of taxation and costs facing developers seeking to deliver housing – including increased LBTT payments, section 75 contributions and measures to improve energy efficiency and the drive to net zero – the SBSL is going to hit some sectors particularly hard. Build to rent (BTR) has struggled to gain traction in Scotland compared to many successes in England – it is estimated that Scotland has delivered just 400 new BTR homes in the last 12 years, whereas the equivalent number in England is 130,000. Despite a more favourable stamp duty (LBTT) position in Scotland, planning difficulties and uncertainty around the Housing Bill have had an impact. Given that there is no immediate sales revenue for BTR developers, the SBSL is not going to help BTR development gain momentum.

The purpose-built student accommodation (PBSA) sector has not suffered the same head winds, but still faces the same issues of meeting the new levy when there are no capital receipts coming in.

The BTR (and PBSA) sectors can deliver a large number of homes, relatively quickly, and relieve pressure for housing elsewhere. As well as supporting BTR and PBSA, it would be helpful if the SBSL recognised the important role that affordable housing can play here. Currently the proposed exemption for affordable housing only covers publicly funded housing – which ignores privately developed affordable housing (including mid-market and discounted market rent) which is delivering vitally important housing across the country.

For those developers who are not able to escape the clutches of the SBSL, it is important that they start planning for it now – so that for any options or contracts being negotiated just now, any abnormals definition should encompass sums payable under the SBSL. We expect the Scottish Government to publish indicative figures in October this year, so that will give developers some visibility on how much the SBSL will cost them.

The Scottish Government’s consultation on the proposed SBSL, which is to apply to all forms of new residential development from 1 April 2027, closes on Friday 15 August. You can read more about the Bill and submit a response to the consultation here.

If you would like to discuss anything raised in this article, please contact Richard Rennie or your usual Burness Paull contact.

Read more about the Scottish Building Safety Levy here and here.

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