The RICS has called on the Government to fulfil its regeneration pledges ahead of the Treasury’s pre-budget report.
In a detailed submission to the Treasury, the RICS urged the Government to make good its promise to abolish stamp duty in deprived areas and to reduce VAT on refurbishment.
The Government committed itself to abolishing stamp duty in designated areas in a White Paper last year, as well as its pre-budget report.
The harmonisation of VAT was one of the key proposals in the original Urban Task Force report, coordinated by Lord Rogers and unveiled on 29 June 1999.
The Treasury is thought to have dropped its policy on VAT because of the loss of revenue that would be incurred. Instead, the Government introduced a handful of VAT initiatives, including a reduced rate for residential-to-residential conversions
The RICS document states: “These moves leave a glaring anomaly at the heart of the VAT system – the fact that new buildings are zero-rated whilst property refurbishment attracts VAT at the full rate.
“The Urban Task Force and others have drawn attention to the fact that this disparity undermines the avowed Government objective of maximising the amount of development on brownfield sites. We strongly back measures to redress this disparity.
“Whilst reducing the level of VAT on refurbishment generally would mean a significant loss of revenue, a start could be made by introducing a reduced rate in specified areas (such as those to be designated for stamp duty reduction).”
The RICS also encourages the Government to base other initiatives on its “designated areas” policy, for instance its approach to utilising vacant property. However, the document criticises the Treasury for so far failing to come up with a formula for designating deprived areas.
Other RICS suggestions include the promotion of urban regeneration companies, aided by flexible tax schemes, and legislation to tie landowners into business improvement districts (BIDS). In the UK, as opposed to the US where the concept originated, BIDS would be supported by business rates raised from occupiers.
EGi News 22/10/01
