VAT: Building Repairs and Maintenance

Lord Swire Excerpts

Wednesday 19th April 2023 Lords Chamber

Asked by

[Lord Swire]

To ask His Majesty’s Government what assessment they have made of the case for applying the same rate of VAT to building repairs and maintenance as to the construction of new homes.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

The Government maintain a zero rate of VAT on new-build residential or qualifying buildings to incentivise the construction of new homes and increase the housing supply. The Government do not have plans to introduce a new VAT relief for building repairs and maintenance. Introducing a new relief for repairs and maintenance would have a significant fiscal cost, which would lead to associated spending, borrowing or tax decisions taken elsewhere.

[Lord Swire (Con)]

I am most grateful to my noble friend, but she will have to concede that new building emits 48 megatonnes of carbon dioxide in the UK each year—equal to the total emissions for the whole of Scotland, and that is before you get to the emissions coming out of the SNP headquarters as we speak. Conversely, if we are serious about addressing climate change, we should look at refitting and restoring existing housing stock. Now that we are outside the EU, I simply cannot understand why we cannot have one level of VAT, or even a 5% level, both for new housing and for refurbishing and restoring old stock.

[Baroness Penn (Con)]

My noble friend raises an important point. He is right that the renovation of existing properties can be an energy-efficient way to bring them back on to the market. There are special reduced rates of VAT for the renovation of properties that are converted either from commercial to residential use or from one residential use to another, if they are renovated after a period of two years without use. A temporary zero rate of VAT applies to installations of qualifying energy-saving materials, such as insulation, to address some of the points my noble friend raised.