The levy is due to come into force later this year raising £3.4bn from developers forced to pay a fee on new homes.

The letter organised by the Home Builders Federation warns that the “nakedly anti-development new tax” will threaten the Government’s plans to boost house building.

It notes that no formal impact assessment has been conducted to estimate the levy effect on housing supply and that work to more accurately assess how much the funding might realistically be required to collect from industry will only be carried out during 2025.

HBF flagged-up the financial burden the levy will place on developers, especially SMEs already struggling with rising development costs and burgeoning regulatory pressures.

The federation warned it will add “thousands of pounds to the cost of providing each new home.”

It added: “UK home builders have already contributed £6.4 billion towards building safety remediation efforts through a 4% precept on Corporation Tax, along with additional self-remediation commitments from over 50 builders.

“By contrast, product manufacturers, some of whom were heavily criticised by the Grenfell Tower Inquiry Phase 2 report, have yet to contribute any financial support.”

The letter concluded by stating:

We believe that before introducing this latest new tax on home building, the Government should:

1. Complete the work, promised by officials to be undertaken during 2025, to determine how much funding is required.
2. Publish a robust Impact Assessment to explore how many fewer private and Affordable Homes will be built as a result of the levy.
3. Reconsider the collection and administration of the levy which is expected to hit SME homebuilders particularly hard.
4. Be braver in tackling the product manufacturers who rebuffed attempts by the previous administration to obtain financial contributions for building safety remediation efforts.