MSPs voted 65 to 54 in favour of the general principles of the Building Safety Levy (Scotland) Bill, which would impose a new charge on the construction of certain residential properties from April 2028. Ministers expect the levy to raise around £30 million a year toward the country’s cladding remediation programme, estimated to cost up to £3.1 billion over 15 years.

Public finance minister Ivan McKee said the legislation was essential to ensure developers contribute to the cost of fixing unsafe buildings identified in the wake of the 2017 Grenfell Tower fire, which killed 72 people. He argued the levy represented only a “small amount” of a property’s overall cost and would prevent a “disproportionate level of costs” falling on taxpayers.

But the bill has triggered mounting concern across the housing and construction sectors, with critics warning it risks making marginal sites unviable, slowing development, and worsening Scotland’s already acute housing pressures.

Opposition parties warn of reduced supply

Scottish Labour and the Scottish Conservatives both voted against the bill at stage one.

Labour housing spokesperson Mark Griffin said the proposals were “disproportionate, vague” and risked “reducing the supply of new homes in Scotland, exacerbating the government‑declared housing emergency”. While supporting the principle of a levy, he said the bill’s design lacked clarity and certainty.

The Conservatives echoed those concerns. MSP Liz Smith said she supported improving building safety but had “serious doubts” about legislation that could add thousands of pounds to the cost of each new home. Tory finance spokesperson Craig Hoy described the bill as “the wrong bill”, warning it would be “negligent” for parliament to pass it without major changes.

Committee warns of “significant risk” to housing market

Holyrood’s Finance and Public Administration Committee took the unusual step of making no recommendation on the bill — the first time it has done so.

In a report published late last year, the committee said it was “unconvinced” the government had fully considered the implications for Scotland’s housing emergency. It warned the levy carried a “significant risk” to the housing market, particularly in rural areas and for SME developers, and urged ministers to carry out detailed sensitivity analysis before setting rates.

Committee convener Kenneth Gibson said the policy appeared driven by an “arbitrary figure” for revenue generation rather than a well‑structured, sustainable levy.

Industry fears

Developers and rural organisations have repeatedly warned that the levy could tip already marginal sites into unviability.

Miller Homes told MSPs it had already scaled back Scottish construction, with output falling from 25% of its UK total in 2019 to “well under 14%”. General counsel Julie Jackson said many sites were already operating on thin margins and the levy would “tip more sites over the edge”.

Trade body Homes for Scotland (HFS) questioned the government’s modelling, arguing ministers had overstated the size of the new‑build market. HFS policy director Fionna Kell said the sector should not be relying on “estimates of estimates” eight years after Grenfell.

Rural landowners have also raised alarms. Scottish Land & Estates warned that even the loss of one or two homes in small villages could have “far‑reaching effects”, from school rolls to workforce availability. They urged ministers to extend the island exemption to rural mainland communities.

Delay to 2028 but uncertainty remains

The Scottish Government has already delayed the levy’s introduction by a year, pushing implementation to 1 April 2028. Ministers say this will give the sector “appropriate lead‑in time”, though no transitional arrangements will be offered – meaning any development receiving a completion certificate on or after that date will be liable.

Indicative levy rates will not be published until after the 2026 Scottish Parliament election, prolonging uncertainty for developers and investors.

The Scottish Property Federation said the delay offered “breathing room” but warned that the lack of clarity on rates would continue to influence investment decisions.

Next steps

The bill will now proceed to stage two, where MSPs can propose amendments. Ministers say they are open to “constructive” changes, including around exemptions.