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BPF responds to Lib Dem manifesto

The Liberal Democrats have stoked controversy by saying they would levy VAT on new build homes to make it cheaper for people to refurbish properties.

The rate of VAT for repairs would be equalised with that for new build homes. EU law prevents it being reduced to zero (the amount currently paid on new homes), meaning the lowest possible rate would be 5 per cent – representing a massive hike in VAT on housing.

By equalising VAT on repairs, they could reduce the rate from 17.5 per cent to a minimum of 5 per cent, but this would be countered with VAT on new build properties being increased from the current rate of zero.

On the whole, today’s manifesto is commendably detailed paper covering a wide range of issues with reasoned thought and more candidness than we have seen in the others so far.

Liz Peace, chief executive of the British Property Federation, said:

“It’s a well reasoned and wide-ranging document and our only slight reservation is that many of the changes being proposed are large scale ones which may well not be doable within a five year parliament. But given the LIbe Dems could well hold the balance of power in their hands, it is good to see they have a firm grip on many of the issues faced by society and the economy.

“The fly in the ointment as far as reducing VAT on house repairs is the rather large one of increased VAT on new homes. However, let’s not kid ourselves that Tory plans to cut stamp duty for homes up to £250,000 will be a silver bullet for the woes of first time buyers. Affordability is determined by whether you can get your hands on finance, not by whether someone has knocked a tiny 1 per cent off the purchase price of the property.

Click here to view a BBC Working Lunch film on stamp duty with our comments

“There is much to be commended in the Lib Dems’ manifesto, even if much of the content around planning seems to have been lifted directly from the Conservative’s planning green paper. It’s rather ironic that the Lib Dems have pushed to introduce third party right of appeals when the very same policy was actually absent from the Tories own manifesto. We stand by our position that this would be a recipe for chaos and a needless interference with the fragile development market by a party claiming it wants to let business breathe.

“The focus on real solutions to green issues is highly positive and would go a long way to tackling the long-standing failure of ministers to invest in home-grown technologies or develop a suitable strategy for their use. For too long, Britain has been left behind the likes of Germany and Scandinavia and it is essential we begin to make progress in cutting carbon emissions, not least across our ageing homes and offices, shops and factories.”

For more info, interviews or comments, contact Andrew Teacher on 07968 124545 / ateacher@bpf.org.uk