The Scottish Property Federation (SPF) has called for urgent exemptions from the Scottish Government’s proposed Building Safety Levy (BSL) for small and medium-sized enterprise (SME) developers, the build to rent (BTR) sector, and all affordable housing.
SPF made the call in response to a consultation on the new levy, which is intended to support the funding of the Cladding Remediation Programme.
SPF warned that the blanket imposition of the BSL could stall housing delivery in Scotland, making more residential schemes unviable.
The group pointed out that the housing industry already pays taxes and makes voluntary contributions towards cladding remediation.
It also highlighted significant sums paid by developers through section 75 planning obligations to support affordable housing, transport, education, water, and other infrastructure.
SPF said high construction and financing costs, combined with the new levy, would make it harder to deliver new homes.
The organisation warned this could lead investors to pick locations outside Scotland, due to concerns about viability.
Additionally, SPF said the build to rent (BTR) sector would be hit especially hard, as BTR schemes do not generate upfront sales revenue to offset costs.
The group also raised concerns that the proposed exemption for affordable housing only covers publicly funded developments, ignoring the role of private capital in affordable housing delivery.
Robin Blacklock, interim director at the SPF, said: “While we naturally support measures to improve building safety, and tackle some of the legacy issues associated with cladding remediation, the blanket application of this proposed levy during a declared housing emergency, at a time when development viability is already under severe strain, risks seeing many new homes being delayed or cancelled, thus worsening the supply shortage across all tenures.
“Given the disproportionate impact, we are urging the Scottish Government to exempt SME housebuilders, the Built to Rent sector, and all forms of affordable housing including mid-market and discounted rent model (provided by the private sector) from the BSL to avoid disincentivising critical parts of the housing market.
“With construction and financing costs continuing to be high, the cumulative impact of the levy on top of the range of existing contributions will undermine the ability of the sector to bring forward critically needed new homes and could lead investors to choose locations outside Scotland where development is deemed to be more viable.”
