2 December 2019

Cut the VAT to unleash green housing revolution, party leaders urged

VAT cut on home improvements could generate £15bn in new taxes, create 95,000 jobs and unlock £1bn green revolution

A coalition of business groups and organisations from across the property and construction sectors have joined forces to urge the next UK government to cut VAT on maintenance and improvement works to people’s homes.

Reducing VAT from 20% to 5% on home improvement works would unleash investment in housing, stimulate the economy and enable the UK’s transition to net zero carbon, groups including the National Federation of Builders, the Federation of Master Builders and the British Property Federation said today.

The coalition has today written to each of the leaders of Westminster’s four largest parties, asking them to speak for the Cut the VAT campaign during the remainder of the General Election campaign and to meet with the coalition early in the next Parliament.

This is vital, the coalition of built environment groups said, in order to green the nation’s homes, with domestic buildings responsible for around 20% of the UK’s carbon emissions.

In addition to improving the standards of older homes, and those in rural areas, this measure would also help unleash investment in new housing. Build-to-rent (BTR) is a relatively new asset class in the UK that provides high quality, purpose-built and professionally managed homes.

The BTR sector has grown from fewer than 30,000 homes to 148,000 homes in the last five years – and delivered a quarter of London’s housing output last year. By reducing the irrecoverable VAT associated with maintenance and management of BTR, the sector can deliver even more, the letter said.

Richard Beresford, NFB’s Chief Executive, said:

“The NFB has been open about the dual responsibility that industry and government has in reaching net zero carbon by 2050. The Cut the VAT campaign is an important step in moving forward with tangible initiatives to enable the building sector and its clients to achieve significant embodied carbon savings and improve energy efficiency. We hope any future government will take forward this VAT reduction proposal to show they are serious about decarbonising the UK as quickly as possible.”