National Housing Federation calls for housing associations to be exempt from Economic Crime Levy

The government’s increased Economic Crime Levy will hit the housing association sector’s borrowing capacity by £224m a year, according to analysis by the National Housing Federation (NHF).

The NHF estimates it will cost its members £14m a year once increased charges come into effect from April. It said this will reduce borrowing capacity resulting in 1,100 fewer social homes.

The levy introduced from 2023 applies to anti-money laundering regulated entities and sees organisations charged an annual fee according to scale based on turnover. Housing associations fall under the legislation if they provide debt advisory services, undertake lending activity to tenants or provide shared ownership advice and resales.

The fee is being increased in the higher bands from 1 April 2026, with organisations of more than £1bn turnover charged £1m instead of £500,000. NHF says this applies to two of its members.

Those in ‘band c’ with turnover of between £36m and £500m will see their bill increase fourteen-fold from £36,000 to £500,000. NHF said eight housing associations are affected.

NHF is calling for an exemption or special category for not-for-profit housing associations.,

It said: “The Economic Crime Levy is having a disproportionate impact on the capacity and services of many not-for-profit housing associations..

“The structure and scope of the levy means that housing associations are treated in the same manner as commercial financial institutions and estate agency services. Unlike for many of these businesses, these essential activities to support residents form a very small proportion of a housing associations’ operation. Yet, because the levy is calculated against total UK revenues, housing associations face paying the same levy rate as these other businesses.”

A spokesperson for the Treasury said: “The Economic Crime Levy applies to any entity that carries out activity regulated by the Money Laundering Regulations. The levy was designed with simplicity and proportionality at its core, to limit the administrative burden on regulated entities.”