With the introduction of VAT on listed buildings approaching in less than two weeks, many owners of such properties in the North East are frantically trying to complete alteration and restoration work to save thousands and secure the buildings’ future for generations to come.
On October 1, the Government is lifting the exemption on VAT to listed buildings, which it terms an ‘anomaly’, and imposing VAT at 20 per cent to all alterations and restorations in a move which will cost owners of listed buildings in the region thousands of pounds just to ensure their property does not fall into disrepair.
However, investors who applied for listed-building consent before March 21 can breathe a sigh of relief if approved, as their building will be exempt from the imposition of VAT, providing preservation or refurbishment works have started and are at least 50 per cent complete by September 2015.
Preservation of a listed building involves dedication in time and money due to the more expensive methods and materials required to maintain them.
The Royal Institution of Chartered Surveyors (RICS), along with much of the property industry, fears that the extra 20 per cent levied against owners of these buildings will mean these essential works will no longer be financially viable.
As a result many owners of listed properties in the region are rushing to complete works and ensure the survival of the building and Britain’s heritage.
The lifting of the VAT exemption is also impacting on the desirability of listed properties to future investors.
This could result in a significant number of buildings ‘rotting’ on the market and decreasing in value.
RICS, as part of the ‘Cut the VAT Coalition’, is calling for the Government to abandon the introduction of 20 per cent VAT to listed buildings and introduce VAT at five per cent on all home repair, maintenance and improvement works.
RICS’s view is being echoed throughout the property industry with many lending their voice to the condemnation surrounding the lifting of the VAT exemption.
Summers Inman Construction & Property Consultants in Newcastle is advising clients whose projects will start before the deadline but finish after, to be mindful of the VAT imposition and, of course, those who fall within the exemption (having applied for listed building consent before March 21), to ensure that they meet the September 2015 deadline.
Michael Henning, director at Summers Inman, said: “Listed buildings are some of our country’s greatest assets.
“Removing the VAT exemption on alterations could mean the difference between a bright future and potentially damaging our region’s heritage, with potential investors and current owners simply unable to foot the bill for this extra expenditure.”
Stephen Thornton, UK head of external affairs at RICS, said: “The Chancellor has missed a golden opportunity to create a level playing field on all residential works. Research shows that five per cent VAT across the board would create 26,560 jobs in the construction sector with a total economic stimulus of about £1.7billion in 2012 alone.”