Nick Clegg’s call for VAT to be introduced on Newly built Homes has been met with harsh criticism from first time buyers and developers alike.
Under the Lib Dem’s pre-election plans, a tax of 5-7% would add up to £15,000 to the cost of buying the average newly built home. Moreover, this amount would likely increase as the housing market starts its recovery. With lenders demanding deposits of up to 25 per cent, the move would be a bitter blow for first time buyers already struggling to get a foot on the property ladder.
Representing 80% of the new homes built in England, the Homes Builders Federation have warned that the plans would worsen the already severe housing shortage. “The Lib Dems’ plan is an extremely poorly thought through proposal that would constrain much needed housing development still further and potentially increase the cost of housing” said Stewart Baseley, the organisation’s chief executive.
Meanwhile, Jonathan Fair, chief executive of Homes for Scotland, commented: “Any measure increasing the cost of new homes is sheer madness and will simply exacerbate the problems we as a country already face.”
With the national housing shortfall rapidly approaching the one million mark, developers have called for reductions to the regulatory costs currently imposed on housing developments, many of which rose dramatically during Labour’s time in office. Moreover, many have called for the provision of more potential sites to be made a top priority.
The new chancellor George Osborne, is preparing an emergency budget due to be unveiled on June 22, in which he will outline the full extent of public spending cuts needed to bring down the UK’s staggering £163bn debt. In the meantime, developers have vowed to lobby the coalition government.