The Green Party has offered up one of the property industry’s most-demanded policy changes: a cut to VAT on housing repairs and renovations.
The VAT rate on repairs and renovations is currently 20% but many campaigners, including the Federation of Master Builders’s “Cut the VAT” division, have been clamouring for a reduction to 5%, the lowest level allowed by European rules, at least on listed buildings. The FMB released a thoroughly compelling report on why the rate should be cut last year; read all about it on PrimeResi here.
The Greens cite some research from Experian that shows that a reduction in VAT on housing renovation and repair from 20% to 5% could create 42,000 extra full-time equivalent construction jobs from 2015 to 2020, plus an additional 53,000 jobs in the wider economy over the same five-year period. Whatsmore, Natalie Bennett’s party says a cut in the VAT rate would incentivise the “greening” of homes through insulation and other measures. The total cost of the VAT cut would be £6.6bn over the five years from 2015 but would result in an economic stimulus of £15bn in the wider economy.
Tom Chance, Green Party housing spokesperson: “This VAT cut would be a real boost for green jobs and warm homes. It comes at a time when we desperately need to be investing in a nationwide home insulation scheme, to cut bills and end the scandal of fuel poverty. This election presents Britain with a chance to vote for change. This VAT cut, just one of an array of bold policies from the Green Party, demonstrates our commitment to building a Britain of warm, comfortable homes.”
Brian Berry, Chief Executive of the FMB: “A VAT reduction on housing renovation and repair work will empower home owners to contribute to growth, jobs and greener homes. There is no other proposal that will help the UK achieve so many of its economic, environmental and social aims with so little cost to the public purse. Independent research shows that the wider benefits of a VAT reduction on housing renovation and repair would stimulate more than £15bn of wider economic activity, which completely overshadows any direct losses to Treasury coffers due to a drop in the percentage charged for VAT. The Green Party is the latest political party to commit to a VAT reduction on housing renovation and repair and we are delighted they see the enormous value of this policy.”