Scottish Land & Estates (SLE) has voiced strong concerns that the new Building Safety Levy (Scotland) Bill could severely undermine housing delivery in fragile rural and island markets unless critical exemptions are introduced.

The levy is intended to create a fund for remediating unsafe cladding, but SLE argues its application in rural areas will have devastating, unintended consequences.

Anna Gardiner, Senior Policy Adviser at SLE, stressed that while the principle of improving building safety is supported, "rural Scotland must not become collateral damage in the process."

SLE's core concern is the financial viability of rural projects:

• Financial Strain: In areas like Highland and Dumfries & Galloway, build costs are already high, property values are comparatively low, and the private rented sector is shrinking. Projects are often marginal or unviable without public support.

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• "Robbing Peter to Pay Paul": If the levy further reduces viability, it will increase dependency on existing public funds like the Rural and Islands Housing Fund, diverting resources needed elsewhere.

• Cumulative Impact: The levy comes on top of other financial burdens, such as the new Scottish Passivhaus Standard, which is expected to add £12,000 to £20,000 per unit, creating overwhelming financial strain.

SLE urged the Scottish Government to introduce a rural exemption, mirroring the approach taken for island areas, to protect these fragile markets where housing need is acute.

The organisation also cautioned against using urban definitions of project scale: "Many rural projects appear large on paper but are built in small phases over several years... While urban developments might benefit from economies of scale, those savings are often eroded in rural areas by logistical challenges and slower sales."

Furthermore, SLE criticised the short timescale for industry preparation and the lack of clarity, with crucial details on the levy expected only in secondary legislation, increasing uncertainty for developers and landowners.