Building Repairs: VAT

Lord Bishop of Chelmsford Excerpts

Thursday 14th December 2023 Lords Chamber

Asked by

[The Lord Bishop of Chelmsford]

To ask His Majesty’s Government what steps they are taking to improve the sustainability and quality of existing buildings, including by cutting value added tax to incentivise building repairs and maintenance.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Penn) (Con)]

My Lords, the Government are committed to improving the sustainability of existing buildings. The Autumn Statement expanded the current zero rating of VAT on the installation of qualifying energy-saving materials in homes until March 2027. This relief, worth more than £1 billion, now also includes additional technologies and extends to buildings used for charitable purposes. Additionally, the Government are investing £12 billion in Help to Heat schemes to ensure that homes are warmer and cheaper to heat.

[The Lord Bishop of Chelmsford]

I declare my interest as the Church of England’s lead bishop for housing. I thank the Minister for her Answer. Would she not agree that, as a point of principle, it is preferable to incentivise restoring and renewing buildings which already exist, rather than purely incentivising new building? The present system encourages new build over reuse. While it is clear that we need more housing in particular, this does not encourage a culture of sustainability. The Listed Places of Worship Grant Scheme has been a great help for certain kinds of buildings, but it is only for places of worship, it is due to expire in 2025 and it requires considerable administration. Now that the UK has left the EU, the rate of VAT on repairs is in the gift of His Majesty’s Government. Will they commit to the principle of sustainability by undertaking a review of the potential benefits of a lower rate of VAT on repairs?

[Baroness Penn (Con)]

The reality is that we need both to restore and repair existing buildings and to encourage new build to address our housing supply issues. We have a reduced 5% rate of VAT for renovation works on residential properties, including the conversion of buildings from one residential use to another; on conversions from commercial to residential; and on the renovation of properties which have been empty for two years or more prior to renovation work. We are looking carefully at this issue. Since we left the EU, we have had requests for relief totalling about £50 billion across different forms of VAT. This request needs to be seen in the context of that bigger figure.