Building Safety Levy – Previously Developed Sites Discount: Update

When Mills & Reeve assembled a team of lawyers from across the built environment sector to explain the Building Safety Levy back in May, I somehow made the team to discuss the 50% discount which applies to previously developed sites. I remarked that each of the criteria to qualify for the discount potentially opens its own can of worms, so it’s welcome news that ministers have now sought to clarify some of the drafting with a number of tweaks in a draft set of amendment regulations due to come into force on 1 October.

First a brief reminder on the discount. The Building Safety Levy is calculated using an area rate. The area rate is discounted by 50% if the approved chargeable scheme is on a “previously developed site” (PDS). To be a PDS, at least 75% of the land to which the relevant planning permission relates needs to be “previously developed”. And land is “previously developed’” if a building has been situated on it at some point on or after 1 July 1948, subject to various specific exceptions.

Now, let’s get out our can opener. As originally drafted, the Levy Regulations defined a building by reference to its definition in the Town and Country Planning Act 1990 (which does help to explain how a planning lawyer such as I made the team for that webinar!). That brought into play a whole separate piece of legislation and decades of jurisprudence around the definition of a building in the planning context. Presumably in a bid for more clarity and less complexity (and maybe fewer planning lawyers), the draft amendment regulations do away with that cross-reference to planning legislation. But they also go much further than that. Instead, we have a new definition of “building”: “any permanent building and any other permanent man-made structure or erection*, including any extension, and any part of a building, as so defined.” And a new definition of “structure or erection” which “includes, but is not limited to— (a) areas which are reinforced for load-bearing, paved or otherwise surfaced with man-made materials; (b) plant and machinery”.

That definition of “structure or erection” has the effect of massively widening the scope of the PDS discount. Whereas before we were looking at, well, actual buildings, now we’re also looking at tarmac, paving, hardstanding, roads etc. The amendment also counteracts a quirk of the planning definition of a building by expressly including plant and machinery. Suddenly, the PDS discount starts to look relevant to a lot more sites, especially in an industrial context.

The “building” must have been “situated on” the land, but there were questions over what that meant and how much of a building could be taken into account for the purposes of calculating whether at least 75% of the relevant site was previously developed. The draft amendment regulations have addressed one of those questions. They clarify that “any underground part of a building which extends beyond the part of the building which is not underground is not to be taken into account” and buildings which are wholly underground don’t count. However, the amendments still leave unanswered questions over the correct calculation of the above ground footprint. Is it just the parts of the building which actually touch the ground that matter? What about parts of buildings which project over land but aren’t physically “situated on” it, like balconies or arches or bridges?

The amendment regulations also carve out unlawful buildings, which makes sense, but does add a new can of worms – and a reference back to planning legislation to determine what “lawful” means. When assessing whether the PDS criteria have been satisfied, developers and local authorities will need to consider the extent to which buildings have been lawfully constructed and planning conditions have been complied with. If buildings are more than a decade old, that shouldn’t normally be a problem because planning breaches generally become immune from enforcement action (and therefore lawful) after ten years, but where sites have been developed more recently, this could create a significant due diligence workload. But at least it gives a planning lawyer a good excuse to remain on the team!