St Albans has one of the largest conservation areas in the country. It is full of listed buildings. They also dot the surrounding villages and countryside. Few are great monuments, most are modest domestic buildings. The owners incur considerable expense in maintaining and improving these properties in ways that conserve our historic environment.
This makes the government's proposals to end VAT relief on extensions and alterations to listed buildings very worrying. Overnight listed building owners face a 20 percent increase in costs. The Treasury's own documents admit this will have a negative impact on construction in this area - at a time when a downturn in construction overall is seen as having been the main cause of the UK going back into recession. Alongside the rightly vocal campaign being mounted by the churches against these proposals, here are some arguments against this proposal on behalf of the more workaday buildings which make our city and district so special.
Almost any work to a listed building is interpreted by conservation officers and case law as needing Listed Building Consent. In fact, it is hard to get consent for large extensions on a listed building. Most alteration work is intricate, carefully specified and small scale. Alterations too, generally have to be constructed out of 'correct' materials - the cost of which generally represents a significant uplift in construction costs over that for 'standard' alterations. 3-coat hair-lime plaster on timber lath is far more expensive than plasterboard and skim. The owner of a non-listed house can insert insulation, remove asbestos boarding, change a flue for boiler, fix bookshelves to walls, to name but a few typical actvities, without having to spend time and money on getting consents. Listed building work tends to use locally, or UK-sourced materials and is also more labour intensive: 3-coat lime plaster on lath takes days longer than tacking up plasterboard. By increasing costs and reducing 'demand' there is a knock-on effect on a small-scale, locally based, highly skilled and sustainable industry.
Also at risk is the re-use of increasing numbers of redundant churches and other historic structures. There are many instances where these are being converted to community use. Alteration works are necessary (under the Building Regulations and functionality): there is no proposal to alleviate the VAT burden for this, threatening the viability of such schemes. There exist already other areas of lower VAT rates (5% and 6%) and other zero-rated services (newbuild housing) in the construction industry. So this is not a special case.
Personally I think that a lower, flat rate of, say 5 - 10% (set after proper consultation - unlike this surprise measure) to cover both repairs and alterations for all works to listed buildings would help to alleviate costs to HMRC in disputes - but also acknowledge the extra costs and statutory burdens to listed building owners in maintaining the country's heritage assets.