Government to cut VAT on building renovations

The government has announced that it is to reduce VAT on the renovation of buildings, a move that has been welcomed by the Royal Institution of Chartered Surveyors (Rics).

Announced in the Pre-Budget Report, the measure will see VAT reduced to five per cent for homes that are being renovating after having been empty for two years rather than three.

However, Rics has said that a lower VAT rate should also be applied to environmentally-friendly repairs of existing buildings, such as those which aim to reduce the amount of carbon produced by a home.

The organisation was also cautious over the government's confirmation of its housebuilding plans.

"The homebuilding target in England implies a growth rate in the number of new homes built up until 2016 of 3.7 per cent - a drop from the average of 5.2 per cent that has been achieved over the past 5 years," noted Luke Herbert, UK public policy manager at Rics.

"For many years to come, housebuilding levels will still be insufficient to deal with projected household growth," Mr Herbert added.

Earlier this year the Financial Times reported that the rate of housebuilding actually fell in the first six months of 2007.

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