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

The vat cut on home improvements, proposed by FMB and other construction groups, could generate £15bn in new taxes, create 95,000 jobs and unleash a £1bn green revolution

The Federation of Master Builders (FMB) is the UK’s largest trade association in the construction industry, championing continuous improvement in building standards for over 75 years. Recently they have joined a coalition of business groups and organisations from across the property and construction sectors, including the British Property Federation (BPF), to urge the next UK government to cut VAT on maintenance and improvement works to domestic properties.

Reducing VAT from 20% to 5% on home improvement works would generate investment in housing, stimulate the economy and encourage the UK’s transition to net zero carbon, the group said recently. The coalition has written a letter 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.

These actions are vital, the coalition said in the letter, to make the nation’s homes more eco-friendly – domestic buildings are responsible for around 20% of the UK’s carbon emissions, at present. 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 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. Melanie Leech, Chief Executive of the BPF, said: “Reducing the rate of VAT on all repairs, maintenance and management of residential property would support the greening and improvement of our housing stock, and help the build to rent sector deliver more homes. We therefore urge the next Government to support the Cut the VAT campaign.”

Brian Berry, Chief Executive of the FMB, said: “An amazing 20 million floors, 8 million lofts and 5 million cavity walls all in need of insulation across the UK, according to the Government’s own figures. The four main parties must go further in their policy pledges to promote and incentivise energy efficiency works. Given that homeowners tend to complete these tasks as a consequence of larger home improvement works the rate of VAT on repair and maintenance work needs to be reduced from the current 20% to 5%.”

Federation of Master Builders, Unit 10, Kilbegs Business Centre, Plasketts Close, Antrim, BT41 4LY
T: 028 9446 0416