Government to include PBSA in new building safety levy

The Government responds with its intention to include purpose-built student accommodation (PBSA) developments in the new building safety levy.

Government to include PBSA in new building safety levy | PBSA News

The government has announced that PBSA developments will be included in its new building safety levy – although developments on brownfield sites will 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 PBSA developments differently to for-sale properties. Some respondents highlighted that PBSA developers also compete for land with developers of for-sale properties, so if PBSA is excluded from the building safety levy, it would give PBSA developers a market advantage.

Others also felt that it was important to charge the levy on PBSA developments in order to maintain a broader tax base, lowering the average levy rate.

On the other hand, respondents who argued that PBSA 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 PBSA 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 PBSA 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 PBSA 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 PBSA developments in the building safety levy. The government has stated that it understand the different profit models for PBSA compared to for sale, but as both sectors remain profit-making parts of the house-building sector, excluding PBSA would present a competitive advantage as both compete for land in the same way.