I’m very reluctant to comment on party political matters because ultimately this is a blog about self-building, but page 81 of the Liberal Democrat manifesto has startled me somewhat.
I assume no-one in our homebuilding world gave two hoots that the Lib Dems are proposing to introduce VAT (at 5%) on new builds – in order to ‘equalise’ the playing field and make renovations more attractive – while they were very much a sideshow in the election campaign.
But now they have enjoyed such a bounce in support – one poll today puts them in the lead – on the back of Nicholas Cleggolas’ performance in the recent TV leaders’ debate, I’m sure I’m not alone in sitting just a little bit less easy in my chair this afternoon.
As you all must surely know, all new homes, including those produced by self-builders, are zero-rated for VAT purposes. Adding 5% to the cost of materials and labour would increase the typical cost by around £11,000 – not exactly what the construction market needs at a time when housebuilding numbers are pitifully low.
It’s not as if the scheme encourages renovations either – all it does is disincentivizes new builds. Any party serious about getting houses built cannot really condone adding VAT to this area. Can they?
This, coupled with the exceptionally badly thought-out Mansion Tax – a blanket tax on all homes sold over £2m (“So, that’ll be £1.95m then. Again.”) makes me worry slightly for the future. I can only assume that now people are actually looking at their policies with a serious eye, the Lib Dems might actually come up with some serious policies.