Scottish Building Safety Levy: consultation analysis report

5. Analysis Part C – Impacts

Part C of the consultation document focused on impacts of the tax in accordance with legislative requirements to complete a number of impact assessments in the development of the Bill. These sections invited views on impacts in relation to the following:

• Business and Regulation
• Child Rights and Wellbeing
• Environment
• Equality
• Fairer Scotland Duty
• Island Communities

Business and Regulation

Question 23: Do you have any information which could inform any final Business and Regulatory Impact Assessment (BRIA) relating to the Bill?

Half of the responses to this question stated that they did not have any information to inform the BRIA.

Housing delivery and cumulative impacts

Some responses expressed the view that the SBSL will have an impact on the development, viability, and delivery of housing. Some also highlighted that the impact of the SBSL on housing must be considered within a wider context of cumulative policy impacts and regulatory burdens on the industry, and that the BRIA should take these broader impacts into account.

Opportunities for further data, engagement, and assessment

Some responses highlighted opportunities for further engagement and evidence gathering as part of the BRIA process, including:

• Further direct engagement with housebuilders
• Further engagement with representative bodies of the housing industry
• Engagement with the Federation of Small Businesses
• Reviews following the introduction of the SBSL
• Review of the South of Scotland Regional Economic Partnership Housing Action Plan

Homes for Scotland, in their response, highlighted the need for further data to inform and improve the decision-making process, including an analysis of the taxpayer profile and modelling to assess the impact of the SBSL on marginal developments. Their response noted Homes for Scotland’s intention to support Scottish Government in gathering this data.

Wider impacts

It was noted that there may be wider impacts to recognise beyond those on the housebuilding sector, with one respondent highlighting that any increased burden to local authorities should be resourced, and another raising a concern about the capacity of the construction industry and wider technical experts to deliver the remediation programme.

Child Rights and Wellbeing

Question 24: Are you aware of any examples of particular current or future impacts, positive or negative, on young people, (children, pupils, and young adults up to the age of 26) of any aspect of the proposals in this consultation?

Housing delivery

Several responses expressed the view that the SBSL would have a negative impact on housing delivery, which would subsequently negatively impact young people and families. It was noted that constraints on housing delivery would make it more difficult for young people to buy their first home and would further the issue of young people and families in temporary accommodation. The wider benefits of housing delivery to children and young people were also highlighted, noting the connection between quality housing and health, and the provision of community facilities (including schools) supported by developer contributions.

“...each year the delivery of new homes in Scotland provides £179m of developer contributions to support schools, healthcare, public open space, transport and sport, leisure and community facilities. The sector's impact on education – directly via training and developer contributions and indirectly via the proven relationship between housing standards and educational outcomes – is substantial.” - Homes for Scotland

House prices

Several responses expressed the view that the cost of the SBSL will be passed on to house purchasers through increased prices, and that this would have a disproportionate impact, with respondents highlighting younger people as first-time buyers, families seeking to buy bigger homes, and the issue of child poverty. It was also noted that the SBSL may lead to increased rents in the Build to Rent sector, which may have a disproportionate impact on younger people.

Building safety

A few respondents noted the positive impact of the SBSL raising revenue to tackle the problem of unsafe cladding, an issue which has affected children, young people, and families.

Environment

Question 25: Are you aware of any examples of potential impacts, either positive or negative, that you consider any of the proposals in this consultation may have on the environment?

Almost half of responses to this question stated that they were not aware of any examples of these potential impacts.

Investment in energy efficient homes and infrastructure

Some responses raised that the additional cost of the SBSL may impact developers’ ability to invest in and delivery energy efficient homes and infrastructure.

“Through improved energy efficiency, recycling of construction waste and creation of green space – together with a reduction in car dependency via green transport links and creation of '20 minute neighbourhoods', the housebuilding sector is rightly credited with making a considerable and increasing contribution to Scotland's battle against climate change. These positive outcomes must not be inhibited by regulation making the delivery of new homes unviable.” - Homes for Scotland

Brownfield and re-use

Some responses highlighted that the SBSL could discourage development on brownfield land or conversions and re-use of existing and historic buildings. These respondents noted that there is a positive environmental impact to these projects and that a reduced rate or exemption would serve to incentivise their development.

Replacement of unsafe cladding

Respondents queried the intention for the disposal of unsafe cladding, the environmental impact of the replacement materials, and the impact on surrounding biodiversity of carrying out the remediation work.

One respondent noted the positive impact of funding the removal of unsafe cladding which exacerbates the risk of fire, which subsequently has negative environmental impacts.

Equality

Question 26: Are you aware of any examples of how the proposals in this consultation may impact, either positively or negatively, on those with protected characteristics (age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation)?

Almost half of responses to this question stated that they were not aware of any examples of these potential impacts.

Housing delivery

Some responses expressed that a reduction in housebuilding resulting from the SBSL would have a disproportionate impact on those with protected characteristics – it was noted for example that these groups may face higher levels of housing insecurity and lower incomes. One respondent raised that SMEs deliver significant quantities of housing adapted to the needs of specific groups, and that this would be reduced if SMEs were to be liable for the SBSL.

House prices

Some responses expressed the view that the cost of the SBSL will be passed on to house purchasers through increased prices, and that this would have a disproportionate impact on those with protected characteristics.

Accessible homes

Respondents noted that the SBSL may discourage developers from building accessible homes which would negatively impact those with disabilities.

Building safety

It was raised that those with protected characteristics may be disproportionately affected by unsafe cladding, therefore could benefit from improved building safety and adequate funding for cladding remediation.

Fairer Scotland Duty

Question 27: Are you aware of any examples of potential impacts, either positive or negative that you consider any of the proposals in this consultation may have on groups or areas at socio-economic disadvantage (such as income, low wealth or area deprivation)?

Housing delivery

Similarly for other questions, some responses expressed that a reduction in housebuilding resulting from the SBSL would have a disproportionate impact on those at socio-economic disadvantage.

House prices

Relatedly, responses expressed that the SBSL would result in increased house prices which would have a similarly disproportionate impact on those at socio-economic disadvantage.

Lower value and high deprivation areas

A few responses noted that the SBSL could have disproportionate impacts on rural areas (where market values and average incomes may be lower, and construction costs may be higher) and on areas of high deprivation. It was raised that the problem of unsafe cladding largely affects urban areas, therefore these lower value rural areas and areas with high deprivation would be contributing towards a tax which would not directly benefit them.

Wider economy and community

Responses emphasised the benefits of new housebuilding to the wider economy and community, including improved outcomes for health, education, and community regeneration; developer contributions to community facilities and infrastructure; and the creation of employment opportunities not only in housebuilding but in related sectors supported by the housebuilding industry.

Affordable housing

It was raised that it is important to exclude all affordable housing from the SBSL in order to mitigate impacts on those at socio-economic disadvantage. It was also expressed that the SBSL may generate knock-on impacts to the cost of affordable housing.

Island Communities

Question 28: Are you aware of any examples of how the proposals in this consultation might impact, positively or negatively, on island communities in a way that is different from the impact on mainland areas?

Existing housing pressures

Several responses expressed that island communities (alongside rural areas) face existing pressures on housing that would be exacerbated by the SBSL and create disproportionate impacts for these areas. It was raised that there are high construction costs associated with building on islands, and therefore existing housing shortages which could be worsened by adding the additional cost of the SBSL onto residential development in these areas.

“...the levy being applied to island communities will disproportionally add to the cost of delivery which is already under significant pressure as it is impacting on total numbers being built on our islands. Adding additional costs through the levy would run counter to other initiatives being taken forward by the Government such as the Islands National Plan and work to boost population in areas suffering from depopulation...” - Argyll and Bute Council

Buildings affected by unsafe cladding

A few responses noted that the buildings requiring remediation of unsafe cladding are likely to be predominantly located in urban areas and cities, rather than in island or rural areas. It was therefore raised that island communities would be facing an additional cost burden to contribute towards a tax that their areas would not benefit from.

Impacts on SMEs

Some responses raised that SMEs deliver the majority of housing in rural and remote areas, and that if these developers were to be liable for the SBSL, the additional cost would have a significant impact on the viability of their businesses and development sites, thus generating further impact on the availability of housing in rural and remote communities.

Scottish Government response

The Scottish Government is grateful to respondents for their input on these questions around impacts. The information provided has been factored into the Impact Assessments which have been produced for the Building Safety Levy (Scotland) Bill, and published on the Scottish Government website.