Government proposal to abolish VAT relief on listed building alterations comes under fire

The RIBA has hit out hitting at government proposals to abolish VAT relief on listed building alterations.

The RIBA said the proposal – which would change the current zero rate to the standard twenty per cent rate of VAT and was announced in the Budget last week – could make necessary upgrades to listed buildings “unaffordable” and would “almost certainly” have a detrimental effect on the number of heritage projects undertake.

RIBA conservation group chairman Robert Franklin said: “There is a real concern from the RIBA that the planned increase from zero to twenty percent VAT for alterations to listed buildings could have a debilitating economic impact on development in the historic environment.  

“Whilst VAT may discourage some inappropriate proposals, I fear a 20% rate, so suddenly applied, will make it unaffordable for listed building owners to make necessary alterations to many of our cherished buildings, whether for correcting past mistakes or bringing up to date for new uses.  

“The economics of such schemes may increase the number of buildings ‘at-risk’, through pressure to demolish and replace with new-build, particularly for housing which remains zero rated.

“Due to the speed of the proposed VAT change we are particularly concerned that those schemes deemed viable based on the zero rate may suddenly become non-viable, and not go ahead.”   

Labour MP Tristram Hunt also joined in the criticism, calling the plan a “real error”.

He told the Commons: “The decision to remove the zero rate of VAT on approved alterations to listed buildings is a real error.

“When that is combined with forthcoming planning reforms, it speaks of a government with little feel for the natural and historic environment of this country.”

Last week, Noble Francis, economics director of the Construction Products Association, told Building the proposed move would hit a niche part of the construction industry already suffering since the recession.