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03/01/2021

Cutting VAT for adaptation is a better route to net-zero than building anew

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Adapting and resusing existing buildings is a far more carbon-friendly than knocking them down and demolishing them, observes Adele Shaw. So why don't we reward developers for doing that, instead of penalising them?

As we emerge from a global pandemic, in the midst of a climate crisis, thoughts turn to how the principles of a just transition to net-zero carbon can deliver a green recovery. Crucial to this will be the adaptation of existing buildings.

Proper maintenance of existing assets is often a better option than building new. Buildings contribute to global warming over their whole lives: when we build, maintain, use and demolish them.

Traditional buildings give our places their character, making them attractive places to live and work. This contributes to our wellbeing. Keeping them in use or finding sustainable new uses for vacant buildings means we can continue to benefit from them.

Scotland’s planning system needs to reflect this. The policy framework to be set out in the fourth national planning framework should prioritise the adaptation of existing buildings.

Other changes are also needed. The UK’s value-added tax (VAT) system is complex. VAT is levied at zero rate for new construction, promoting new-build. Repair, maintenance and refurbishment of existing buildings attracts 20 per cent VAT. The tax is payable at 5 per cent for certain works, including installation of energy efficiency products, refurbishing long-empty homes, and the residential conversion of some property types.

“Buildings contribute to global warming over their whole lives: when we build, maintain, use and demolish them”

The government’s emphasis on reaching net-zero provides a chance to revisit how to provide parity for the use and adaptation of our building stock. Adopting a reduced rate for all maintenance works to existing buildings would streamline the tax regime. Potential increases in such projects could make up the shortfall from any change in VAT rates. An increased need for skilled construction jobs would result from the emphasis on proper upkeep of our building stock.

Equalising VAT levels would support our government’s carbon reduction and sustainability targets and show that the historic environment is a route, rather than a barrier, to net-zero.

Provision of more homes that are fuel-efficient during their life cycle is vital for achieving net-zero, as well as the wellbeing agenda. The current system works against the need to prioritise the upkeep of our historic buildings and puts a burden on those who want to upgrade and adapt them. This runs against wider priorities for ensuring resource efficiency and sustainability. 

Adele Shaw is deputy head, environmental assessment in the planning, consents and advice service at Historic Environment Scotland

Image credit | iStock

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