Amidst all the hoo-hah about last week’s bad news in the Budget for owners of Listed Homes – wherein the Chancellor removed the (admittedly slightly odd) zero-rating for VAT on alterations and extensions to Listed Homes (repair work was charged at the full rate, making the whole affair appear to discourage maintenance of our old buildings) – I was thinking about VAT on existing houses and potential savings people could make.
There is an interesting situation regarding VAT on renovations to empty homes which all of a sudden seems quite relevant in our decidely sticky housing market. If a house has been empty for 10 years then it is effectively treated as a change of use and work is zero rated. Now the image that comes to mind of a house that has been empty for 10 years or more is of a decrepit, isolated old place, almost falling down. Yet the image of a house that has been empty for 2 years or more, where the VAT burden can be reduced to 5%, is becoming a lot more realistic.
I know plenty of houses that have been on the market for two years. And, it’s safe to say, a pretty decent minority of those will be empty – the owners simply move on (in several ways…) and by the time the house is finally sold, new owners will come in and do some work to make it their own.
So next time you see a house that has ‘No Chain’, and it appears to have not been lived in for some time – don’t forget to check just how long. It could save you 15% off all your renovation work.
See this part of VAT Notice 708 for more.