Fool News: Government Lends A Helping Hand To Ailing Houses

Empty homes in hope of a revamp were given a new lease of life in yesterday's pre-budget report.

Empty homes in hope of a revamp were given a new lease of life in yesterday's pre-budget report as Alistair Darling announced plans to extend the reduced rate of 5% VAT to all homes that have been unoccupied for 2 years or longer, down from 3 years.

The new plans, which come into force in January 2008, will see a closure in the gap between VAT rates for new build properties and refurbishment projects. However, though the plans are a welcome move, some feel that not enough is being done to encourage redevelopment.

Luke Herbert, UK policy manager at The Royal Institution of Chartered Surveyors commented that, `The current difference in VAT rates between new build (0%) and refurbishment (17.5%) is perverse given that annual new build amounts to less than 1% of the total housing stock. [The] Government will need to move further to meet its green aspirations for housing.'

In addition, Mr. Herbert was keen to stress the importance of making allowances for creating more environmentally friendly homes, suggesting, `a reduced rate of VAT should be extended to carbon reducing repairs and refurbishment of all existing buildings to further incentivise green living.'

This proposal coincides with the Government's reiteration of its plans to meet demands for new housing. Originally announced in its Housing Green Paper in July 2007, the Government has set a target of building 240,000 additional homes a year by 2016, delivering 2 million new homes by 2016 and 3 million by 2020.