The Building Safety Levy: Unexpected Cash-Flow Issues

The Building Safety Levy (BSL) is fast approaching, coming into operation in England on 1 October 2026. Much of the industry discussion so far has understandably focused on the rate of the levy, and its potential impact and importance as part of development planning. However, for many developers, the timing of the payment may be as important, if not more, than the amount itself.

The issue of when the money actually has to leave the business is one developers should pay close attention to. This is particularly relevant where schemes are being delivered in phases, where sales receipts are expected to be generated over time, or where cash flow is closely aligned with the construction and occupation programme. The common assumption is that the BSL will operate broadly like a cost attached to individual plot sales, with the developer paying as homes are sold or towards the end of a development. However, that is not what is stipulated by Regulation 24 and this may have costly implications for developers’ cash flow plans.

Under Regulation 24 of the BSL Regulations 2025, the levy charged against a building control application ‘must be paid by the earlier of the completion notice date or the first date of occupation’. Importantly, where a building control application covers more than one residential building, the first date of occupation means the date on which any of those buildings or parts is first occupied.

In practical terms, this means that where a single building control application covers 200 homes, and the first home is occupied, the BSL associated with that application may become payable at that point. The developer cannot necessarily wait until the remaining 199 homes have been completed and sold, creating a significant consideration for development viability, funding and cash flow certainty.

For example, if a large application generates a £2m BSL liability, a developer could potentially have to fund the full £2m when the first relevant homes are occupied, rather than progressively recovering the cost through hundreds of individual sales.

The Government’s own guidance reinforces this guidance, describing the levy as ‘a charge that must be paid before completion of the building work or occupation, whichever is earlier’, bringing building control and cash-flow strategies much more closely connected.

For larger or more complex schemes, developers should act now and consider whether building control applications align with genuine construction and delivery phases. As phasing will now have the additional pressure of dictating when levy liabilities will be due. Planned correctly, this allows for payments to be spread across timeframes, more closely aligned to when a development is actually being delivered and when income is generated.

But the Government has made clear that developers cannot circumvent the levy by breaking a major development into smaller applications. Instead, it is about understanding the interaction between the building control application, construction programme, occupation dates and the resulting cash requirement before the applications are submitted.

What should developers do now?

Developers should start by reviewing major sites where building control applications are likely to be submitted on or after 1st October 2026, and identify any applications that may legitimately be submitted before that date, where appropriate and in line with traditional arrangements. It will also be Important to map proposed building control applications against the construction and occupation programmes, so that potential payment triggers can be understood at an early stage.

The next step will then be for developers to calculate the potential BSL liability for each application and assess the likely timing of payment under Regulation 24, modelling the cash-flow impact to prevent negative implications. Where the delivery programme supports it, genuine re-phasing of building control applications may help to align levy payments more closely with the actual predicted construction programme helping to bring them back in line with cash flow.

At Brookbanks, we believe the BSL should now be treated as a development cash-flow issue, with the impact to affect developers and their projects more widely. Moving forward, understanding the payment trigger before building control applications are structured will make a notable difference to how developers should plan, fund and deliver their schemes.