Is VAT incentivising housing demolition? A literature review

This new report by Jules Moscovici questions how VAT policy influences construction, demolition and environmental outcomes, given 50,000 building are demolished every year, with the built environment representing up to 40% of the UK's total emissions.

We have commissioned this research as a result of our work with housing campaigners and their concerns about developers hastily demolishing structurally sound buildings. We noted disparities in VAT rates between new builds and refurbishments, and commissioned researcher Jules Moscovici to produce a literature review to begin to piece together the impact of this VAT structure, especially as local authorities have net zero targets, in addition to the Government's legally-binding 2050 net zero objective.

Overall, the literature shows that the tax regime is incentivising developers to demolish housing rather than renovate it. This has negative consequences for the environment, carbon emissions, and of course, communities.