Widespread relief that VAT on new build remained off the political agenda despite help for decontamination.
Developers have welcomed this month's Budget for the boost it gives to urban regeneration.

In the Budget, Chancellor Gordon Brown announced measures to encourage development of contaminated land and conversions through tax relief with a reduction in VAT from 17.5% to 5%. The introduction of VAT for new build remained firmly off the agenda, to widespread relief. There were also incentives to invest in disadvantaged communities through the introduction of a new tax credit and the exemption of home transactions from stamp duty.

"By introducing tax benefits for companies investing in our cities and through the introduction of generous tax relief for clearing contaminated land for residential development, Chancellor Brown's budget is a positive step in facilitating the move to city living," said Bruce Walker, managing director of urban specialist Nicholson Estates.

"On a practical level this Budget unites environmental and regeneration policies and helps to support planning needs with regeneration and budgetary concerns," said Clive Wilding, managing director of Gleeson Homes.

This Budget largely confirmed the measures announced in last November's pre-Budget statement which are:

  • companies that acquire land in a contaminated state will be able to claim an accelerated repayable tax credit of 150% on any additional site preparation cost for cleaning up the land. This is an increase on the 100% level announced in the pre-Budget report;
  • reduction in VAT to 5% for conversions of residential property to residential communal homes such as care homes and homes with multiple occupation;
  • a consultation document has been issued on a new tax credit for community investment, to encourage private investment in disadvantaged communities;
  • full financial flexibility for Regional Development Agencies from 2002-2003, including the full end-year flexibility to carry over their resources from one year to the next, matched by increased accountability through objectives and targets for meeting their strategic goals;
  • Corporation Tax relief for company donations to Urban Regeneration Companies and similar bodies.
  • exemption from stamp duty for properties in the most disadvantaged areas of the UK. A list of areas qualifying will be published "in due course"; and
  • an increase in the standard rate of landfill tax from £11 per tonne to £12 per tonne from 1 April 2001.

    • Source

    Building Homes