Experts call for scrap of VAT on building refurbishments

The construction industry could be helped in meeting its sustainability targets if VAT were removed from the cost of home and building refurbishments, experts at Bath University claim.

VAT
Housebuilding (Image by Capri23auto from Pixabay)

New-build projects are not liable to pay VAT, which can provide developers an incentive to demolish existing buildings.

Dr Will Hawkins, lecturer in Bath’s Department of Architecture & Civil Engineering and a member of the UK FIRES consortium, said: “We need a new approach to construction, where the creative re-use and adaptation of existing buildings is the default option, or even incentivised. A first step would be removing VAT on building refurbishment, which is already zero on new buildings – this would remove the disincentive to reuse perfectly good existing buildings and help us to create a more circular economy with less waste and emissions.

“Producing materials to make new buildings releases huge amounts of CO2 and depletes natural resources. All too often, perfectly safe structures are demolished to make way for new developments, and this also creates considerable unnecessary waste.”

Professor Tim Ibell, Dean of the Faculty of Engineering & Design at Bath, and a member of the UK FIRES consortium and the Institution of Structural Engineers Climate Emergency Task Group, said that choices on construction need to be placed in stark terms to change thinking within the industry.

“Research carried out here at Bath and with UK FIRES shows us that we simply must use less stuff if we are to have any hope at all of meeting our legally-binding requirement to achieve net zero by 2050,” he said.

“Given the enormity of carbon footprint stored up in our built environment, we must re-use and re-mould our existing buildings and assets without recourse to knock them down and build something new. This needs to be part of the culture of the construction industry – now.”

The call comes in response to the Decarbonising construction: building a new net zero industry report, published by the National Engineering Policy Centre and the Royal Academy of Engineering.

Published on September 24, 2021 the report set out plans to reduce the industry’s impact, in part by calling on companies to stop knocking down buildings given the ‘embodied carbon’ cost of construction and of the raw materials used in most projects.