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'Zero-rate VAT for property upgrades if you want to hit EPC targets' say big landlords

jeremy hunt

The British Property Federation (BPF) has called on the government to zero rate VAT on building repair and maintenance to incentivise essential upgrades across the residential sector '� or risk missing its 2050 net zero target.

In the run-up to next week's Budget, it says the current approach of targeted VAT relief on the installation of energy saving materials is ineffective as it fails to recognise that energy efficiency improvements are rarely carried out in isolation.

The BPF points to the substantial challenge in retrofitting the country's residential housing stock, where about 58% of properties in England have an EPC of D or lower but less than a fifth of homeowners plan to improve their property's energy efficiency. 

Challenge

Commercial property faces a similar challenge with an estimated 10% of buildings in London rated EPC F or G. To encourage investment in large-scale commercial retrofit projects, the BPF wants reform of the capital allowance system to better support and encourage long-term investment into carbon reduction and energy efficiency measures.

It says an alternative form of relief for capital expenditure could provide full tax relief in one year and use a repayable tax credit system.

Immediate measures

It adds that the government should also take immediate measures to ensure business rates are not a barrier to improvement and to introduce improvement relief.

This would ensure property owners aren't penalised by rate rises immediately following environmental performance improvement works.

melanie leech bpf

Chief executive Melanie Leech (pictured) says 80% of commercial and residential buildings that will exist in 2050 have already been built.

She adds: 'The country's homeowners and commercial property owners face a real challenge in reaching net zero targets and complying with incoming legislative changes. Failure to remove financial barriers to energy efficiency upgrades is a failure to recognise the huge task the country faces in reaching net zero.'�

Read more about EPC changes.

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