The Building Better, Building Beautiful Commission has highlighted the AJ’s RetroFirst campaign and its call to use VAT to level the playing field between new-build and renovation
In a hard-hitting report to the government published today (Thursday January 30), the commission puts forward extensive evidence, including reference to the AJ’s ongoing campaign, in support of its tax reform recommendation, which it first mooted in its interim report last summer.
The report, Living with Beauty, highlights what it says is the ‘inconsistency of the VAT position within a system that seeks to ensure the most sustainable and popular’ development outcomes.
‘The need to address this commands increasing public recognition, having been championed by the Architects’ Journal in its RetroFirst campaign,’ the report says.
’Many of the submissions that the commission received included strong calls for this reform, including those of the TCPA [Town & Country Planning Association], the UK Green Building Council, the Home Builders Federation and Historic England.’
The report argues that the current system of VAT, whereby much new-build construction is zero rated while retrofit work is charged the full rate of 20 per cent, incentivises demolition, discourages ‘regenerative development’ and encourages greenfield over brownfield development.
’Government VAT rules are therefore not in alignment with its policies on planning, set out in the NPPF,’ the report says. ’This should change.’
The report calls on the government to ‘align VAT on housing renovation and repair with new build in order to stop disincentivising the re-use of existing buildings’.
It argues that ’reroofing, extensions, conversions and renewable heating’ along with ‘bringing derelict buildings back into use’ should be zero rated or at most charged a reduced rate of 5 per cent. Reducing VAT on refurbishment from 20 per cent to 5 per cent is one of the three demands of RetroFirst.
The report says such a move by the Treasury could provide a £15 billion stimulus to the wider economy, including the creation of more than 95,000 new jobs.
It also highlights the environmental logic, including the quote ‘the greenest building is the one that is already built’, estimating that such a VAT cut could lead to the reduction of 240,000 tonnes of CO2 across 92,000 homes.
Elsewhere, in the report’s regeneration section, it claims that many places in the country are ’losing their identity or falling into dereliction’ but criticises quick fixes reliant on major new construction.
Citing a ‘vicious circle’ of factors responsible for such failing and ‘abandoned’ neighbourhoods, the report says this has been ‘accelerated by VAT and other provisions, which incentivise new-build over restoration, so discouraging developers from taking an interest in these abandoned places while putting them beyond the resources of local councils or conservation societies.’
The report also includes a section on ‘recycling buildings’ which recommends that government and local authorities introduce an ’adaptability test’ as part of granting planning permission for new projects.
‘For example, plans for a new office block should be given preferential treatment if accompanied by an empirically based analysis, showing how the block could be converted to a new use compatible with its position in the urban fabric,’ the report says.
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