Building safety isn’t just a compliance issue. It’s now feeding directly into development appraisals, funding decisions, corporate structures, insurance arrangements and historic liability reviews.

Since 1 October 2026, the Building Safety Levy has applied across England, adding a further cost to residential development to help fund the remediation of unsafe buildings. At the same time, recent court and tribunal decisions continue to expand the routes for recovering historic remediation costs. The result is a more complex risk environment for developers, contractors, consultants, product suppliers and associated corporate groups.

What is the Building Safety Levy?

The Building Safety Levy is a government charge on qualifying new residential development in England. Introduced under the Building Safety Levy (England) Regulations 2025, it is designed to help fund the remediation of unsafe residential buildings, including those affected by cladding defects.

The government's stated intention is to raise around £3.4bn towards the cost of remediating unsafe residential buildings, alongside existing industry contributions, developer pledges and contractual recoveries.

Building Safety Levy rates and exemptions

The levy applies to qualifying new residential development in England, including certain new homes, conversions and purpose-built student accommodation, where the relevant thresholds are met and no exemption applies. It is calculated by reference to internal floorspace, with rates varying by local authority area. The highest Building Safety Levy rate is £100.35 per m² in Kensington and Chelsea, and the lowest is £12.70 per m² in County Durham. Brownfield or previously developed sites may benefit from a 50% discount where the statutory conditions are met.

The Home Builders Federation has been strongly critical, arguing that the levy risks making more schemes unviable, particularly for SME housebuilders and high-rise development. This links to their recent research which reveals that £76,000 has been added to the cost of building a home since 2020, raising serious concerns about the viability of new housing developments across the UK.

How recent case law is increasing developer exposure

Case law has generally made the position tougher for developers and their groups. Recent cases show a willingness to look beyond the original development vehicle and examine wider group structures.

There are also examples where developers who proactively remediate defective buildings have pursued the recovery of costs from consultants and other responsible parties. All of this is increasing complexity and changing how businesses value their historic exposure.

Can developers recover building safety remediation costs?

There is, however, a possible counterbalance emerging in product claims. In Mulalley v Sto, the Technology and Construction Court awarded a significant contribution against a cladding product supplier and used the Building Safety Act to reach an associated overseas parent company.

For developers and contractors, this may provide a route to pursue suppliers with deeper pockets where defective products contributed to unsafe higher-risk buildings. That said, this is an area where the case law appears to be at an early stage.

What this means for the construction sector

Taken together, the levy and recent case law make building safety a commercial and financial issue, not just a legal one. Businesses will need to assess the impact on viability, funding, insurance, historic liabilities and future transactions, including whether liability could move across a group or up the ownership chain.

They should also consider whether costs can be recovered from others in the development and construction chain. Building safety risk is therefore likely to feature more prominently in audits, due diligence, refinancing, restructuring, disputes and board-level risk discussions.

For more information, please contact Rebecca Minnich or your usual RSM contact.

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