Property Experts are calling for a reduction in VAT on home repairs, maintenance and improvement work.
It comes as the UK government is about to lift the VAT exemption on listed buildings that is set to put Britain’s 400,000 listed properties under threat.
From 01 October 2012, VAT on all alteration and restoration work to listed buildings will be introduced at 20%. The move means owners of listed buildings will face spiralling costs just to maintain their property, whilst investors will be deterred from restoring empty listed properties.
As Chartered Building Surveyor Jonathan Cornes explains “Preservation of a listed building involves dedication in time and money due to the more expensive methods and materials involved. Much of the property industry, including RICS, has spoken out against the move which could mean essential works will no longer be financially viable, leaving Britain’s listed properties to fall into disrepair”.
The lack of funds will also impact negatively on specialist repair and maintenance companies operating in the construction sector. RICS, as part of the ‘Cut the VAT Coalition’, is therefore calling on government to reduce the VAT to 5% across all home repairs maintenance and improvement.
This would not only have a far smaller impact on owners of listed properties, but also free up finance for non listed property owners to pay for residential works.
“The government has missed a golden opportunity to create a level playing field on all residential works. Reducing the VAT rate to 5% across the board would have helped those who cannot afford vital repairs to their homes. In addition, the reduced costs would prompt investment and bring thousands of empty properties back into use”, said Peter Bolton King, global residential director at RICS.
‘Crucially, the construction sector would also be given a necessary boost. Research shows that VAT at 5% on all residential work would create 26,560 jobs in the construction sector with a total economic stimulus of around £1.7 billion in 2012 alone’, he added.
Stuart Thornhill, Partner at Jonathan Cornes Associates, Chartered Building Surveyors said; “What we should be doing is re-using existing buildings, turning chapels into homes and warehouses into restaurants, for example, but having to pay more tax is going to make that more difficult and is counter-intuitive to what the Government is trying to do.”
“The Government is trying to stimulate building, but this is pulling the other lever by making it more difficult for developers. The knock-on effect is that we are not going to bring these buildings back, they are going to fall into a further state of disrepair and we will lose the cultural and historical heritage that makes our landscape.”
“The Government is trying to stimulate building, but this is pulling the other lever by making it more difficult for developers.
Owners of listed buildings who received Listed Building Consent before 21 March 2012 will be exempt from the imposition of VAT until September 2015.
Property Aspects Magazine appreciates the contribution to this article from Jonathan Cornes Associates.