From the Front Line

The unsurprising rise in VAT announced on Tuesday (it goes up to 20% from January 2011) has a pretty significant impact on the renovation and housebuilding world.

In simple terms, it makes home improvements more expensive from next year (it adds £2,500 to a £100,000 bill) and therefore provides an onus on getting that long awaited loft conversion or extension project nailed in the next six months.

But it's the implication for the old rebuild vs remodel debate that interests me. So many people come across older, even derelict properties with a view to remodelling them in some way and, after much investigation, it's usually more prudent, given the fact that a new build project is zero-rated for VAT, to knock the whole thing down and start again.

This was often the case with a VAT rate of 17.5% and is likely to be even more the case at 20%. 

It's funny how politics works. The Lib Dems campaigned on equalising the tax regimes for renovation and new build; they also opposed a rise in VAT. It perhaps says something about the state of the nation that we ended up one rather than the other.