Until March 2012 the cost of alterations to listed buildings was charged at a zero percent VAT rate. This was a welcome relief for owners of listed buildings who frequently have to pay higher premiums for the restoration and alteration of their buildings. This however has changed George Osborne announced in his Budget that this would be increased to the standard rate of 20 per cent.
It means the cost of altering some of the UK’s most valued buildings and churches will soar, and it will almost certainly have a detrimental effect on the number of projects that are undertaken.
Mr Osborne’s announcement was attacked by heritage groups who warned that it would discourage improvements to listed buildings.
RIBA Conservation Group Chair Robert Franklin said: 'There is a real concern from the RIBA that the planned increase from zero to twenty percent VAT for alterations to listed buildings could have a debilitating economic impact on development in the historic environment. Whilst VAT may discourage some inappropriate proposals, I fear a 20% rate, so suddenly applied, will make it unaffordable for listed building owners to make necessary alterations to many of our cherished buildings, whether for correcting past mistakes or bringing up to date for new uses. The economics of such schemes may increase the number of buildings 'at-risk', through pressure to demolish and replace with new-build, particularly for housing which remains zero rated.
Due to the speed of the proposed VAT change we are particularly concerned that those schemes deemed viable based on the zero rate may suddenly become non-viable, and not go ahead.'
The RIBA will now work alongside our national stakeholders in order to make a full assessment of the impact of the proposed changes and will be responding to the government consultation in due course.
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