"The present listing regime is not fit for purpose. Its connected economies do not support the sector and prevent many homeowners from making much-needed repairs and energy efficiency upgrades."
- Martin Anslow - LPOC
A new study by membership organisation, The Listed Property Owners’ Club (LPOC), has revealed the financial hardships many are facing when trying to maintain their homes: over 90% had either postponed or cancelled works because the additional VAT charge had made works unaffordable.
If VAT was not charged on maintenance for listed property, LPOC research shows that 98% of listed property owners would be more likely to undertake repairs. If just one square metre of works were then actioned, equivalent to a small window repair, for example, the spending potential to benefit the construction and conservation industry exceeds £5bn.
Currently, stagnation in heritage repair is blocking economic opportunities for the UK, with the heritage sector contributing a total Gross Value Added of £36.6bn to the economy and supporting 563,509 jobs in 2019 (pre-COVID-19). For every £1 of GVA directly generated for the economy, an additional £1.21 of GVA follows via heritage sector supply chains and employees’ spending activity.
The UK has one of the world’s highest VAT rates, while inflation and supply issues have seen the cost of certain materials, like insulation, rise by 28% in just 12 months. A skills shortage in heritage and listed building conservation is also adding to the cost burden of repair works.
Data from LPOC shows that more than 50% of listed property owners are in the lowest socio-economic groups C1, C2, D and E, with 80% in bands B to D. Listed building owners can face energy bills as much as three times higher than the UK average.
84% CO2 reduction
The UK has a legally binding commitment to be carbon neutral by 2050, but a failure to make listed properties more energy efficient threatens to compound the issue of carbon emissions in the built environment.
Residential homes alone account for 13% of national carbon emissions. England has one of the oldest building stocks in Europe, with a fifth of all homes being over a century old. Modelling suggests that carefully retrofitting historic homes can reduce long-term carbon emissions by up to 84% in a detached Victorian home, 62% in a Georgian terrace, 58% in a 1900s terrace, 56% in a Victorian semi-detached and 54% in a Victorian terrace.
The VAT regime on listed home repairs means it can be more cost-effective to demolish a house and replace it with a new build, rather than conserving the original building. However, new builds produce five times more carbon into the atmosphere than retrofitting existing homes.
Director of LPOC, Martin Anslow, says: “The present listing regime is not fit for purpose. Its connected economies do not support the sector and prevent many homeowners from making much-needed repairs and energy efficiency upgrades. This is creating another blocker to the UK ever reaching its Net Zero goals. Not only are we incentivising the destruction of our heritage but adding to the global warming disaster.”
LPOC VAT Survey 2023 results
LPOC examined attitudes among its members about the impact of VAT on vital listed building repairs. Its survey received its highest response rate ever recorded, reflecting the critical situation many listed property owners find themselves in.
85% of respondents said they need to undertake maintenance and repair works but are currently delaying due to lack of funds. 58% strongly agreed that a VAT exemption would help to clear a backlog of work, with a further 40% agreeing to some extent – leaving 98% in favour overall.
Martin Anslow concludes: “Listed property owners come from all corners of society and are crying out for help to make their homes more affordable and habitable.
“Government’s refusal to move on VAT is directly working counter to the intention of the listing regime, and collecting a vanishingly small amount of tax which it cannot even put a figure on.
“We want to see the government and opposition get to grips with this growing crisis in the Autumn ahead of the next election.”
