SNP delay new tax after housing developers send warning

Estimates by the sector suggested the new charge could hike the cost of building a new home by around £3,500 per house.

Last week, one of the country’s largest firms, Miller Homes, told Holyrood’s Finance and Public Administration Committee it had already scaled back construction in Scotland, with output falling from around 25% of its UK total in 2019 to “well under 14%”.

They warned that the charge would send them backwards.

The Building Safety Levy (Scotland) Bill, which is currently going through Holyrood, will bring in a fee to be paid by a developer when a new home is completed. The money would then go towards fixing buildings with unsafe cladding.

The levy would apply when a completion certificate is accepted, with the rate to be set by ministers later.

It would cover new and converted buildings but exempt affordable housing, social housing and any building on a Scottish island.

The legislation aims to raise about £30 million a year for the Scottish Government's cladding remediation programme set up in the wake of the 2017 Grenfell Tower fire in London that killed 72 people.

The 23-storey tower's cladding contributed to the rapid spread of the fire.

There are 1,450 residential buildings in Scotland estimated to need remediation work because of unsafe cladding, including about 250 high-rises.

The programme could cost £1.7 billion to £3.1 billion over a 15-year period.

On Tuesday morning, Public finance minister Ivan McKee told the committee the SBSL would now come into force from April 2028 to give the sector “appropriate lead-in time”.

He said the government would set out indicative rates for the levy in June 2026, after the Holyrood election.

Mr McKee told the committee that the levy was “not expected to have any significant macroeconomic impacts”, and that any negative impacts on supply “will be small.”

He added: “Notwithstanding above, I recognise that industry has raised significant concerns around the lack of clarity on levy introduction and the lead in time needed between this and the publication of rates in advance.

“In response to that and to ensure that industry has appropriate lead in time, the commencement date for the levy will be deferred by one year until April 2028.”

Committee convenor Kenneth Gibson said the one year deferment had “come out the blue as far as the committee is concerned.”

He asked if the deferral to 2028 meant that work on cladding remediation, by and large, is going to be deferred “because there's only been a couple of buildings undertaken so far, and yet it’s more than eight years since Grenfell.”

Mr McKee said the government was moving forward with remediation work “as fast as it can and that the delay would have “no impact to that.”

Mr Gibson also told the minister there was a “real sense of bitterness” from developers that have not used cladding that they are “having to pay for someone else’s mistake”.

But Mr McKee told him: “The reality of where we are is that this funding either has to come from the Government’s capital budget – and the bulk of it will do that – and a relatively small proportion will come from the industry.

“We’re taking the same approach that has been taken down south in this regard, we think that is a proportionate response.”