Calls for VAT boost to housing

Nia Williams

March 22, 2010

The ‘Cut the VAT’ Coalition believes that reducing VAT from 17.5% to 5% for all maintenance and home improvement work would help the Government achieve its target of cutting carbon emissions by 80% by 2050. It would benefit millions of UK homeowners by getting rid of cowboy builders, assist with upgrading the private rented sector, help those who cannot afford vital repairs to their homes and bring empty properties back into use.

Recent research by the coalition illustrates a range of benefits to the UK economy:

  • More than 24,000 jobs in the construction sector as well as an extra 31,000 other new jobs in the wider economy could be created in 2010.
  • A contribution of more than £1.4 billion to the UK economy in 2010 alone, rising to £17 billion by 2019.
  • An extra £450 million a year would be generated for the improvement of the UK’s social housing stock, equivalent to the renovation of approximately 19,000 homes per year.
  • It would generate around £1.23bn extra expenditure over the next decade on energy efficiency measures. This would equate to an extra 174,000 homes fully insulated and with energy efficient boilers between 2010 and 2019, leading to a saving of up to 337,000 tonnes of CO2.
  • The chance to reduce the VAT rate is the result of a change in EU legislation, passed in June 2009, which allows member states to permanently reduce the rate of VAT on labour-intensive sectors to 5%.

Commenting on the BPF’s membership of the coaltion, Alan Collett, residential chairman at the BPF, said: “A reduced rate of VAT to 5% on repairs, renovations and management fees would be of huge benefit to the private rented sector, levelling the playing field between those who use VAT and non-VAT registered traders and stimulating improvement in the sector’s stock, 40% of which was built before 1919. Other European countries have been tripping over themselves to use these new powers to reduce VAT – France for example. We would urge the Chancellor this week to follow Monsieur Sarkozy and use these powers to really help housing and create jobs.”

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