Don’t Waste Buildings welcomes the Chancellor’s recognition that we need to accelerate the delivery of social housing and that VAT has a powerful role to play in incentivising action. His announcement of 0% VAT on land sold to registered social housing providers acknowledges a principle we and others have long argued: the tax system should support the outcomes the government wants to achieve.
The government must now apply that same logic to existing buildings. Currently, the cost of putting up a new building incurs 0% VAT, whereas the cost of restoring an existing building incurs 20% VAT. Harmonising VAT to incentivise repairs and renovations to enable the re-use of existing buildings would help bring existing social housing blocks up to standard and unlock opportunities to convert and adapt buildings into much-needed homes.
Historic England has identified the potential to deliver up to 670,000 homes in England by repairing and repurposing existing historic buildings - equivalent to almost half the government’s 1.5 million homes target. With an opportunity on this scale, why has the Chancellor not introduced an immediate VAT incentive to help make it a reality?
While relief already exists for certain conversions, including offices to residential use, much refurbishment remains subject to 20% VAT. It is particularly perverse that social housing providers generally face 20% VAT on work to refurbish existing homes for current and future tenants. The government recognises the value of removing tax barriers to new social housing, yet leaves a significant barrier to improving the homes we already have.
Reforming VAT on refurbishment and reuse would also support thousands of small and medium-sized businesses across the built environment sector, creating work for local firms and skilled trades across the country.
Reusing buildings can cut the carbon emissions associated with demolition and rebuilding, helping the UK towards its legally-binding net zero by 2050 target. In an environment where the Government is making trade-offs against their Net-Zero ambitions, here is an opportunity to align housing delivery, economic activity and climate action with the public’s desire for better homes and better places.
The Chancellor has recognised that VAT can unlock delivery. He must now extend that thinking to the buildings we already have.
For media enquiries, contact: Leanne Tritton, info@dontwastebuildings.com