The Building (Fees) (Scotland) Amendment Regulations 2025: business and regulatory impact assessment

Section 1: Background, aims and options

Background to policy issue

Building warrant fees are intended to fund the local authorities building standards verification service. Customers pay a prescribed fee based of the value of works of the project when they submit a building warrant application. These fees are set nationally, and total income generated for local authority verifiers is dependent on the number of building warrant applications. The number of applications typically vary year to year and are dependent of a number of external factors. A number of changes to strengthen the building standards system are being introduced through the work of the Futures Board that will require verifiers to have the appropriate levels of resource to ensure changes are implemented effectively. Verifiers will need to invest in workforce, technology and training to facilitate the improvements to strengthen the system. More information on the Futures Board Programme can be found here.

The three year building warrant fees model, starting in April 2024, is intended to introduce a fee increase over a three year period to allow for: reporting and feedback of fee income, adjusting the model as necessary, verifiers to invest income, reduction in impact of a one off increase in fees for customers.

Building warrant fees rates were established in 2004 with The Building (Fees) (Scotland) Regulations 2004. Fee levels were increased in 2017 with The Building (Miscellaneous Amendments) (Scotland) to support the verification service achieving full cost recovery. As part of the Futures Board Programme and the need to resource verifiers appropriately, building warrant fees were increase in April 2024 as part of year 1 of a three year model with The Building (Fees) (Scotland) Amendment Regulations 2024.

Scottish Government is undertaking additonal reporting and monitoring of building warrant fee income and expenditure as consulted on in 2023. Continued monitoring and reporting following the 3-year model will be undertaken through formal local authority KPO reporting as part of the Operating and Performance Frameworks, which is currently under review by an external contractor.

Purpose / aim of action and desired effect

The purpose is to increase building warrant fees again from 1 April 2025, in line with year 2 of the three year building warrant fees model. Building warrant fees are used to fund the verification service provided by local authorities, designed to protect the public and ensure construction of safe and complaint buildings. Increasing fees will provide additional income to verifiers to invest in additional staffing and resources to support the strengthening of the building standards system that is being introduced through the work of the Futures Board Programme.

Specific changes include the introduction of an enhanced compliance plan approach requiring pre-application discussions and a Compliance Plan Manager to be in place for High Risk Buildings (HRB) building warrant applications, such as for schools and hospitals. It will also include changes to the verifier Operating and Performance Framework with a focus on compliance. The Compliance Plan approach will be tailored to suit lower risk building warrant projects aiming to strengthen the building standards system across all projects.

This action will support the Scottish Government’s strategic aim to boost sustainable and socio-economic outcomes through investment in construction and infrastructure, specifically objective 5.6.1; to support the delivery of better and modern public services.

The three year fees model is designed to be flexible to allow for annual changes depending on reporting from verifiers. The model gives assurance to verifiers of an increased fee income throughout the three year period (dependent of the number of building warrant applications received) they can invest in their service. Local authorities verifiers across Scotland have varying issues and challenges based on their geographical area and the type and number of building warrant applications they receive. Some authorities experiences are very different such as in the Scottish Islands where the number for applications is lower and therefore the verification service is not fully funded through fees. Local authority budgets are also very restricted in the current economy and verifiers need assurance that there will be the necessary funding to support the changes being introduced. Without a fee increase, successful delivery of the Futures Board Programme would be at risk.

Building warrant fees would increase from 1 April 2025 providing additonal resources to local authority verifiers. The additional income generated is expected to be reinvested as necessary into their building standards service to deliver the changes being introduced through the Building Standards Futures Board programme. The investment and improved performance of verifiers will be measured through additonal monitoring and reporting of fee investment as part of the verifier Operating and Performance Frameworks.

Options (considered so far / still open)

Option 1

• Increase building warrant fees in line with the three year building warrant fees model.

This is the preferred option and involves an amendment to fee regulations through Parliament. This option has been developed through research and modelled as part of a three year approach to increasing fees. Guidance and fee levels in the Building Standards Procedure Handbook will need to be revised and published on the Scottish Government website. Changes to the online ebuilding standards fee calculator will also need to be undertaken. All changes have been considered and included in planning.

The increase in fee levels in comparison to the resulting building work costs is negligible. For example, the current fee payable for a building project at an estimated cost of £100,000 is £1,178. Approximately 1.2% of the estimated building work costs. The proposed increase of this specific fee is to £1,274. A rise of 8.15% and in comparison, to estimated project cost, 1.3%.

Proposed changes to fee levels in year 2 of the model is a relatively small increase (approx. 8%) to fee rates based on the value of works. The starting fee for works valued at less than £5,000 will increase from £200 to £210 (5% increase). The average increase across fee bands is approximately 8%.

Proposed fixed fees for specific criteria of works such as an extension to warrant are either remaining the same or increasing by a maximum of 25%. The maximum increase applies to where a completion certificate has been submitted for the demolition or conversion of a building, but where no building warrant has been granted, a scenario that is to be avoided and against the principles of the Scottish building standards system. This increase goes from £400 to £500 (25%).

Proposed fixed certification discounts provided when a Certificate of Design or Construction are or will be supplied with the building warrant applications are also increasing in proportion to the increase in building warrant fee. This is to incentivise the uptake of certification within the construction industry. The percentage discount applied for value of works above £100,000 will remain the same.

Proposed changes to fee levels are proportionate to reduce the impact of a one-time fee rise and to allow verifiers the time to reinvest fee income into their service. Changes to fee levels are consistent with previous changes in 2017 and 2024 with no change to structure. The outcome will be monitored through additonal monitoring and reporting of fee investment and verifier performance. Building warrant fee rates are prescribed through regulation and all research commissioned to develop and consider this option has been published online on the scot.gov website.

Option 2

• Do nothing.

This option is least preferred and has been discounted. It does not require any input from Scottish Government officials for changes to regulation. This option increases the risk of verifiers not receiving income needed to deliver the changes required for a strengthened building standards service. There is a risk that verifiers won’t have the capacity to deliver an enhanced compliance plan process being introduced through the work of the Futures Board Programme and may dissuade verifiers form fully engaging with changes.

Option 3

• Delay building warrant fee increase to the following year (2026/27).

This option has been considered due to the nature of setting annual financial budgets in local authorities and the time it takes for additional building warrant fee income from the first year of the model to be reinvested into the service. This option however has the risk of delaying the changes being introduced to strengthen the building standards system due to the uncertainty of building warrant fee increases and income over multiple years.

Additional monitoring and reporting of fee investment has shown verifiers are making progress to increase the capacity of their workforce to facilitate changes.

Delaying this policy may impact the Scottish Government’s efforts to address the housing emergency as local authority verifiers may not have sufficient capacity to support the associated increase in housing site building warrant applications.

There are no changes to regulations needed in year 2.

Sectors / Groups affected

Building warrant fee regulations state that an application for a building warrant is as follows:

“Application for warrant (including issue of warrant) for the construction of a building or the provision of services, fittings or equipment in connection with a building (whether or not combined with an application for conversion or an application for demolition)”.

Building warrant applications can be submitted by any member of the public, organisation or business. The proposed building warrant fee increase will affect all users of the building standards system including but not limited to: businesses, construction companies, developers, members of the public, local authorities and building trade sector.

Construction and trade sector organisations and businesses

An increase in the building warrant application fee will affect all organisations and businesses involved in the construction sector who apply for building warrants for construction work or projects. Professions in this industry include, but are not limited to, architects, builders, engineers, joiners, general contractors, electricians, plumbers, carpenters, labourers, surveyors, machinists, welders, technicians and plant operators.

General users of the building standard system

As building warrants are needed for the majority of building and construction work, this would include members of the public applying for a building warrant for any projects they may being undertaking on their homes or property.

Local authority verifiers

Local authority verifiers would see an increase in income generated by building warrant fees, approximately an 8% increase from 2023-24 financial year (based on similar number of building warrant applications). Verifiers will also see a large increase in the number of applications in the lead up to changes in regulations as has been evidenced in previous fee regulation changes.

Developers

Developers operate across Scotland and the UK. All developers operating within Scotland will be affected.