The government has created a ‘perverse incentive’ for demolishing buildings over retrofit projects, Don’t Waste Buildings says.
UK construction companies are not charged VAT on new-build housing developments, but face a 20% rate for retrofit projects.
A new report, The Reuse Dividend: Unlocking Economic Growth from Britain’s Existing Buildings, says this creates a ‘perverse incentive for demolition over renovation’.
Produced by voluntary initiative Don’t Waste Buildings (DWB), the report claims this disparity is the ‘single most impactful barrier’ to building reuse.
DWB is calling on the UK government to overhaul the tax system to incentivise the reuse of empty buildings, warning that Britain is missing out on ‘billions of pounds’ of economic growth.
Report lead author and DWB co-founder Richard Nelson commented: “A single empty building on a main street can define whether that street feels alive or forgotten. The opportunity is extraordinary. The only thing stopping us is the way we tax it.”
To increase the reuse of buildings, the report recommends levelling VAT rates and creating targeted grants for struggling high streets and derelict buildings.
The report also calls for tax credits or relief, such as introducing capital gains tax relief and stamp duty discounts, for bringing vacant buildings back into use while meeting sustainability quality measures.
Finally, it recommends establishing long-term low-interest loans with repayment grants for deep reuse projects either through the National Wealth Fund or a similar institution.
Don’t Waste Buildings is a voluntary initiative that works to highlight up-front, or embodied, carbon and advocates for the productive use of empty and underperforming buildings.
