Tony Carey, chairman of housebuilder St George, which specialises in developing inner-city brownfield sites, said: “It would be a particularly cruel tax that will have a crippling effect on some developers.”
The government is thought to be considering the new tax on housebuilding as part of its campaign to protect the green belt and regenerate decaying urban areas.
Carey said: “It would be a serious problem if developers had bought a site on the basis that no VAT would be charged on any houses built on it and that suddenly changed.”
Richard Saville, financial director of Wimpey, echoed Carey’s view. He said: “The big question about VAT on new housing is the lead-in time. If there is a sensible lead-in time, say two years, it can be factored into new land purchases. If it is put on straightaway, we would not welcome it at all.”
It would be a cruel tax that will have a crippling effect on some developers
Tony Carey, St George
A number of housebuilders claimed that the introduction of VAT on new build would further retard the government’s plans to ensure 60% of development takes place on brownfield sites, which is one of the flagship policies of the Labour government.
John White, chief executive of Persimmon Homes, said: “VAT on new houses could only mean that prices on greenfield development will increase further.
“It is the planning system that will direct brownfield development over time.”
Keith Miller, chief executive of Miller Homes, said: “Tax has never been an effective means of altering the location choice of purchasers. The proposals, if they become a reality, will be just another tax on consumers.”