The Housing Forum welcomes the proposals set out in HMRC’s consultation on the introduction of a new VAT zero rate for land intended for the construction of social housing. This is an issue that we have been aware of for some time as causing problems for some organisations had been raising with Government on behalf of members – see Why a simple reform to tax legislation could unlock new housing : The Housing Forum
A new relief – if straightforward and simple to apply – would reduce administrative burdens for both our social landlord members and our developer members. It would:
- Avoid the need for complex legal negotiations or new legal structures to be put in place in order to deal with the current VAT rules.
- Reduce the costs of specialist legal advice.
- Allow RPs to be more fully involved at an earlier stage, reducing the administrative complexity in transferring land or completed properties to them later on.
- Avoid administrative complexities by aligning the VAT treatment of land with the practical funding and delivery timetable for affordable housing.
- Reduce administration, legal input and internal governance costs.
- Reduce the costs currently spent monitoring construction progress and evidencing that the relevant stage has been reached.
- Improve cash flow of developers and RPs, allowing them to move on to new projects faster.
We therefore support the proposed changes, and believe they have the potential to accelerate the supply of much needed new homes by reducing legal costs and complexities.
Our key recommendation in response to this consultation is that HMRC should make the primary eligibility for the VAT relief tied to RP status (rather than tying the relief to the specific tenure(s) of the intended new homes), and should include local authorities.
You can read our response to the consultation in full HERE
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A Quality Home for All
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