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17 Feb 2011
VAT CUTS FOR housebuilding industry will help to bring the economy back off its knees, claims the Royal Institute of Chartered Surveyors (RICS).
The surveyors body has called on the chancellor to use the tax system to provide incentives to the industry, including cutting VAT on repair and refurbishment of buildings and supporting investment in carbon reduction measures.
RICS also wants the empty commercial property rate relief reinstated, and changes to the tax system to support greater investment in residential property.
"Encouraging activity in these sectors will promote economic recovery and provide sustainable growth in the long term," RICS said in its statement.
It argues that every £1 spent on construction contributes to £2.84 towards economic activity, with the industry employing around 900,000.
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Visitor comments Add your comment
In support of the RICS' position
John Orchard, Marchday Plc
“We fully support the RICS’ position calling for empty commercial property rate relief to be reinstated. Since buying Lingfield Point, Darlington 11 years ago we’ve spent many millions of pounds creating award winning offices from disused factory buildings. However, the scope to create more speculative recycled office space has been greatly impacted by the withdrawal of empty business rates relief on industrial properties.
“With the ongoing demise of manufacturing in the UK, there are, including on our site at Lingfield Point, a large number of empty warehouses. Unlike retail properties and, to an extent, office accommodation, warehouses have a finite life. Some of our warehouses buidlings are approaching the end of their useful economic life.
“We cannot convert all these into offices because there isn’t sufficient demand.
“Like most of the property industry, we were astounded when the previous Government took away the Business Rates relief for industrial properties.
From not paying rates on empty industrial space, we now face paying full rates on properties vacant for more than 6 months. This has added almost £1m a year onto our costs. This in turn is preventing us from regenerating other properties.
“The reason the then Government gave for introducing this tax was to encourage companies to bring back into use properties left redundant. In this climate, why would a company spend money on speculative conversion, (which the banks will not lend on, and for which there is probably little
demand) so that they can pay even higher rates for having them empty?
“In the boom years, property companies, like most other sectors, did reasonably well. With increasing property prices, the property sector has been an easy target for Government in terms of raising extra tax revenues to help fund its spending programme. Firstly, it raised the stamp duty level from a maximum of 1% to 4%. Now we have the loss of relief on empty properties.
“The Coalition Government must reverse this unjustifiable tax. We as a company do not mind paying Corporation Tax as it means we’ve been successful but we deplore having to pay taxes which are totally unfair and counterproductive.”
Posted by: Sophie OMahony, 21 Feb 2011 | 11:25
Mitigate the effects of empty rates
Hi Sophie
Good article. Unfortunately the government are so strapped for cash they feel bound to continue with this unfair tax, even knowing the harm it is doing to our economy.
Posted by: David Flood, 21 Feb 2011 | 19:40
short-termism
Short-termist and short-sighted - all politicians need to look beyond the next election and do what is right for the long-term economic recovery of the country.
Posted by: june kelly, 28 Feb 2011 | 09:41