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The Barker Review has failed to consider VAT policy as a means of revitalising housing supply, according to the Federation of Master Builders (FMB). After analysing the number of empty homes in the UK, the FMB suggests that there are sufficient homes, not currently occupied, to meet annual requirements for new housing for the next two decades.
Andrew Large, external affairs director for the FMB said:
"A reduced rate of VAT for repair, maintenance or improvement (RMI) work would encourage property owners to rehabilitate empty or non-decent properties. This would in turn reduce pressure on land and industry by encouraging better care of existing properties.
"The Government's current policy goes against the principles of sustainability by encouraging the development of thousands of new houses each year when millions of properties are standing empty or need restoring. We are now calling for the Government to take into consideration the need to reduce VAT as part of its policy to secure a steady stream of housing in the UK."
The FMB estimates that over 700,000 homes are currently empty and as many as 7 million properties are in need of refurbishment and are failing to provide people with a decent home. Although new homes enjoy zero-rated VAT, property owners are not encouraged to carry out RMI work because it is charged at the full rate of 17.5%.
First posted: 25 May 2004. Last modified: 25 May 2004.
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