It argues a blanket application by ministers of the tax across the private residential housing industry would lead to much needed housing developments being delayed or even stopped.
Ministers have proposed that affordable housing built with public funded will not be required to pay the tax.
But the SPF, whose members include owners, developers, funders and agents, says no such exemption applies if affordable homes are built using private finance.
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The organisation says the Scottish Government is ignoring an increasing role of private capital investment in the delivery of affordable housing.
It adds imposing the tax on private developers could drive away significant investment in the sector.
The organisation also warns that with legislation proposing rent controls currently going through Holyrood housing developers already face greater “wider policy uncertainty” in Scotland than other parts of the UK meaning investors could look elsewhere to build.
Robin Blacklock, interim director of the SPF, told The Herald: “While we naturally support measures to improve building safety, and tackle some of the legacy issues associated with cladding remediation, the blanket application of this proposed levy during a declared housing emergency, at a time when development viability is already under severe strain, risks seeing many new homes being delayed or cancelled, thus worsening the supply shortage across all tenures.
“Given the disproportionate impact, we are urging the Scottish Government to exempt Small and Medium Enterprise (SME) housebuilders, the Built to Rent sector, and all forms of affordable housing including mid-market and discounted rent model… from the BSL to avoid dis-incentivising critical parts of the housing market.
“With construction and financing costs continuing to be high, the cumulative impact of the levy on top of the range of existing contributions will undermine the ability of the sector to bring forward critically needed new homes and could lead investors to choose locations outside Scotland where development is deemed to be more viable.”
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The SPF’s call comes as part of its response to the Building Safety Levy (BSL) consultation on proposals by the Scottish Government to bring forward a new tax on all new forms of residential development.
The aim of the levy is to support the funding of the cladding remediation programme, which addresses building safety concerns linked to unsafe cladding materials after Glenfell tower block fire disaster in London in 2017 when 72 people died.
The SPF also argues that the property sector is facing increased costs and already contributes substantial funds towards cladding remediation. Developers must also following existing building legislation relating to planning as well as community infrastructure such as transport, education and water, it adds.
The organisation says the BSL could disproportionately impact BTR developments because they generate no upfront sales revenue to offset costs, making the charge harder to absorb.
Independent housebuilders in Scotland are also opposed to the tax.
In its response to the Scottish Government’s consultation, Springfield Properties said the levy was “unfair” and “wrong”.
Its submission said: “All housebuilders who have built properties that are affected by [cladding remediation] legislation have signed a pledge to carry out appropriate works on any properties they have built. To tax them on top of this on properties they have not built is an unfair tax.
“Most buildings that are affected were not built by housebuilders. We generally don’t build over 11 metres. Most buildings were built by property developers.
“Grenfell was the result of architects, construction companies, insulation companies, councils. No housebuilder was involved. None of these organisations are being penalised!”
It added: “This is a tax that is being applied on the wrong organisations.”
A Scottish Government spokesman said: “The Scottish Government is committed to doing what is right and necessary to address the challenge of fixing buildings affected by unsafe cladding. The development of a levy helps ensure developers make a fair contribution to these costs, just as they are being asked to do under equivalent legislation in England
“The design of the levy seeks to minimise any negative impacts on housebuilding, such as including protections for small developers and the affordable housing pipeline, while also facilitating adequate funding to support Scotland’s Cladding Remediation Programme, which will make buildings safer.”
The Building Safety Levy (Scotland) Bill was introduced to the Scottish Parliament in June 2025.
It includes a range of measures to minimise impacts of the levy, including an annual levy-free allowance to support small developers; the ability to vary rates in accordance with differences in house prices across geographical areas and by the type of land being developed, for instance if greenfield or brownfield.
The UK Government agreed to transfer powers to the Scottish Parliament to introduce the levy.
