Cut VAT on home maintenance to unlock green revolution & generate tax

Home renovation

A cut in VAT on home improvements to 5 per cent could create 95,000 jobs, unlock a £1 billion “green revolution” and generate an extra £15 billion in taxes, according to property and construction bodies.

The call is made today in a letter to the leaders of the four main political parties from groups including the Federation of Master Builders, the British Property Federation, the Royal Institution of Chartered Surveyors and the UK Green Building Council.

They say that cutting VAT from 20 per cent to 5 per cent would encourage investment in housing, stimulate the economy and push the UK towards its target of net-zero carbon.

Melanie Leech, 57, chief executive of the property federation, said that cutting VAT on all repairs, maintenance and management of residential property would have a positive impact “by greening our housing stock, tackling the cash-in-hand economy by removing its competitive advantage and addressing the housing crisis”.

Brian Berry, 53, head of the Federation of Master Builders, said: “[There are] an amazing 20 million floors, 8 million lofts and 5 million cavity walls all in need of insulation, 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.”

The groups said that as well as transforming older homes a VAT cut would “help unleash investment in new housing”. Build-to-rent was a relatively new asset class providing high-quality, purpose-built and professionally managed homes, it said.

According to the letter, the build-to-rent sector has grown from fewer than 30,000 homes to 148,000 homes in the past five years. It said that by reducing the VAT associated with maintenance and management, the sector could deliver even more homes.

The idea of reducing VAT on repairs and maintenance is not new. The Cut the VAT campaign, which was formed by business and trade bodies, featured in pre-Budget submissions.