The Building Safety Act: From Compliance Challenge to Financial Reckoning

By Sarah Rayment and David Eden

When the Building Safety Act (BSA) was introduced, its purpose was straightforward: to ensure those responsible for unsafe buildings bore the cost of remediation rather than leaseholders. Since its legislative launch, the Act has evolved into something far larger than a compliance framework. It is now a defining financial and strategic issue for the UK construction and property sectors.

The recent government data, published in August 2026, shows that 4,697 residential buildings over 11 meters remain identified as having unsafe cladding. Of these, 39% have completed remediation, 15% are undergoing works and 46% remain untouched. Progress has been made since the legislative launch, but nearly half of unsafe buildings are still awaiting action.

At the same time, the Building Safety Levy (BSL) will come into effect on October 1, 2026, requiring developers to contribute to legacy remediation costs through charges on new residential building control applications. Levy rates vary by local authority, with London boroughs facing the highest charges, and the government expects to raise approximately £3.4 billion over the next decade.

Taken together, these developments send a clear signal to the market. The BSA is no longer just about safety. It is about financial resilience, regulatory bottlenecks and market confidence.

Against this backdrop, three pressing themes have emerged that stakeholders should monitor closely. These highlight where financial exposure may crystallize and where timely action can make the difference between resilience and risk.

Remediation Progress Gap

Despite improvements since the legislative launch, nearly half of unsafe buildings remain untouched. This is more than a construction backlog. It is a systemic risk. For lenders, it means borrowers could face contingent liabilities that may crystallize suddenly, particularly where Building Liability Orders or extended limitation periods revive historic exposures. For insurers, the same dynamic translates into prolonged exposure to potential professional indemnity claims, with knock on effects for premiums and market capacity. For developers, it means balance sheet uncertainty that could complicate refinancing and investment decisions.

The remediation gap is not evenly distributed. Taller buildings are further ahead, while mid-rise properties lag significantly. This uneven progress creates a two-speed market, where some portfolios are de-risked while others remain vulnerable. Stakeholders must now distinguish between assets with credible remediation pathways and those stuck in regulatory or financial limbo, because failing to do so risks misjudging credit quality, collateral values and refinancing prospects.

Levy Implementation Impact

The BSL introduces a new layer of cost pressure at precisely the moment when developers are already grappling with remediation liabilities and new regulatory constraints. For projects in high-value areas such as London, levy charges could materially affect margins and viability. As recently reported in the news, a property developer estimated that a major site delivered in 2020 would cost 25% more to deliver today because of higher construction costs, tighter planning restrictions and tax changes.

This is not just a developer issue. Investors and lenders must recalibrate their models to account for levy costs, particularly in regions where charges are highest. The levy also raises questions about pipeline viability. Will developers delay or restructure projects to avoid exposure? And how will this affect housing supply?

For stakeholders, the levy is a reminder that policy risk translates directly into financial risk. Understanding how these charges interact with existing liabilities is now essential.

Gateway Bottlenecks

Regulatory approvals remain a choke point. Gateway 2 approvals, required before remediation work can proceed, continue to slow project completion. As of August 2026, approval rates stand at 84%, but with more than 1,600 applications in queue, bottlenecks are intensifying.

For developers, delays mean prolonged exposure and rising costs. For lenders, they create timing risks around refinancing and covenant compliance. For investors, they complicate valuations and exit strategies.

The bottleneck is not merely administrative. It is financial. Every delay translates into cash flow stress, valuation uncertainty and litigation risk.

A Forward-Looking Perspective

The BSA has shifted from a compliance challenge to a financial reckoning. With remediation progress lagging, levy costs imminent and regulatory bottlenecks intensifying, stakeholders must prepare for a convergence of risks that will reshape balance sheets, credit quality and market confidence.

The next 12 months will determine whether the sector can move from reactive compliance to proactive resilience. Stakeholders who anticipate financial impacts, model potential exposure and align strategies across legal, operational and financial dimensions will be best positioned to navigate this transition.

How Kroll Can Help

At Kroll, we view the BSA as a multidimensional challenge defined by overlapping pressures. Our multidisciplinary team helps stakeholders navigate these complexities by combining restructuring, valuation, litigation support, and financial analysis. We support developers, in house counsel, insurers, investors, contractors and advisers with integrated expertise where regulatory risk and commercial exposure intersect.

Strategic Resilience: We help stakeholders manage fragmented information, unclear liability pathways and regulatory uncertainty, enabling clear decision making across legal, operational and financial dimensions.
Litigation Readiness: Our experts provide credible, court tested insights to defend or pursue Building Liability Orders, contribution claims and indemnity disputes.
Valuation Under Scrutiny: We deliver robust valuations to quantify liability and defend asset positions under regulatory and legal pressure.
Forecasting and Modeling: We build defensible models to forecast risk, assess economic loss and support planning in volatile conditions.
Stakeholder Alignment: We foster consensus among developers, lenders, insurers and contractors, navigating complex negotiations and contingency planning under pressure.

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