Rebuild Costs Could Be On The Rise, Says Valuations Specialist

For large housing or Commercial buildings the total cost of rebuilding could be on rise, here’s the word;

The Building Safety Levy (BSL) introduced by the Government from 1^st October 2026 could increase rebuild costs which might not be covered in many insurance policies, according to the UK’s leading insurance valuations provider, RebuildCostASSESSMENT.com..  

The BSL initiated in the wake of the Grenfell disaster is a charge that developers will have to pay when seeking building control approval for new residential projects, including student accommodation. It is calculated on a per-square-metre basis of new floor space and will be collected by local authorities.

Some developments, such as affordable housing, NHS facilities, care homes, and small projects with less than 10 dwellings, are exempt. For the rest, it is a significant additional cost, with Government estimates suggesting it could raise more than £3 billion in ten years. The funds it raises are to be used to upgrade unsafe buildings, particularly those affected by cladding.

Sharon Masters, Technical Lead and Surveyor at RebuildCostASSESSMENT.com, part of Everywhen, says: “The Building Safety Levy is another reminder that rebuild costs aren’t fixed in time. Safety requirements are changing, and each new rule has a knock-on effect on what it would cost to reinstate a property. A rebuild cost assessment already takes into account the latest building standards, but what it can’t do is predict future charges, such as levies. That’s why keeping valuations up to date is so important.  They ensure that cover reflects today’s reality.”

Building costs are already on the increase due to tighter regulations following Grenfell, including mandatory requirements for non-combustible cladding materials, second staircases in residential buildings above 18 metres, automatic sprinklers and enhanced fire safety systems.  The BSL is part of the same process and adds further costs.  It will not physically change the materials used in a building, but it creates a new financial layer to be factored in. The key for property owners and insurers is recognising how these new requirements reshape the baseline cost of a full rebuild.

“The message is clear,” says Ms Masters, “rebuild costs are changing, and insurance strategies must adapt.”

For brokers, the introduction of the levy is another reminder of the importance of clear communication. Valuations must be updated regularly and the extent of the cover must be clarified. A rebuild cost assessment covers compliance with current building standards but not cladding surveys or safety reports.  Also, brokers should make it clear that existing owners won’t suddenly be billed when the levy begins, but that it could apply in the event of a total rebuild.