Following the Grenfell fire, many developers took steps to remediate unsafe cladding on buildings they had constructed.

However, in cases where the original developer no longer exists — so‑called “orphaned” residential buildings — responsibility for these costs has fallen to the Scottish Government.

Scottish Ministers have taken the view that the financial burden of remediation should not be borne by the general taxpayer, but instead by the residential property development sector.

In response, the Building Safety Levy (Scotland) Bill was passed by the Scottish Parliament on 17 March 2026.

From 1 April 2028, a Scottish Building Safety Levy will be introduced. The levy will apply to the construction or conversion of new residential property developments in Scotland and will be charged to developers. Its purpose is to raise funding to remediate unsafe cladding in affected buildings.

Funding the cladding remediation programme

The primary aim of the levy is to support the Scottish Government’s Cladding Remediation Programme.

This programme will fund the work required to address fire safety risks in “orphaned” residential buildings in Scotland that are 11 metres or more in height. These buildings require significant remedial work to ensure compliance with modern safety standards.

The overall cost of the programme is forecast to be between £1.7 billion and £3.1 billion over the next 15 years. The levy itself is expected to generate upwards of £450 million over its lifetime.

Scope of the levy

The levy will apply to new units that are used, or intended to be used, as dwellings or other accommodation, where construction is completed on or after 1 April 2028.

This includes:

  • Purpose-built student accommodation
  • Student halls of residence
  • Build-to-rent properties

However, the levy will not apply to:

  • Hotels and hostels
  • Hospitals and hospices
  • Care facilities
  • Army barracks

Exemptions and reliefs

A number of exemptions and reliefs are included within the legislation.

In support of the Scottish Government’s commitment to deliver 110,000 affordable homes by 2032, the following will be exempt:

  • Affordable housing delivered through the Affordable Housing Supply Programme
  • Social housing
  • New residential units constructed on Scottish islands

Developers will also benefit from an annual allowance of 29 units, meaning that up to this number of units can be constructed each year without incurring liability for the levy. This measure is designed to protect smaller developers.

In addition, the legislation provides for certain reliefs, including:

  • 50% relief for developments on brownfield land
  • First-time buyer relief

Further reliefs, including for conversions of listed buildings are also being considered.

When the levy applies

The levy will become payable from 1 April 2028.

It will be charged to the owner of the property at the point when a completion certificate or certificate of temporary occupation is issued. In most cases, this will be the original developer.

Notably, there are no transitional provisions for developments that were underway at the time the legislation was passed, or those commenced prior to the levy coming into effect. This means the levy will apply based on the completion date rather than the project start date.

How the levy will be calculated

The levy will be calculated based on the floorspace of each unit, measured in square metres, with a rate applied to that floor area.

The applicable rates have not yet been finalised. However, it is anticipated that:

  • Rates may vary depending on geographical location
  • Different rates may apply to different types of development or land

The levy will be collected by Revenue Scotland.

What happens next?

Further detail on levy rates, penalties and the full framework for reliefs will be set out in secondary legislation.

Indicative rates are expected to be published in June 2026.

While concerns were raised during the legislative process, there is currently no fixed end date for the levy. Instead, Scottish Ministers are required to report every three years on how funds have been used and the progress of remediation work.

If you would like more information about the levy, please contact the Lindsays Commercial Property team.