Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether the Government will consider introducing VAT relief on construction costs for sub-market housing developments.

VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services; this includes most construction works. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

To stimulate the construction of new homes, the Government currently maintains a zero rate of VAT on new-build residential buildings. Additionally, residential renovations are subject to a reduced rate of VAT of five per cent if they meet certain conditions. These include conversions of buildings from one residential use to another, conversions from commercial to residential use, and the renovation of properties that have been empty for two or more years. These reliefs apply to all residential buildings, including sub-market housing.

To support the delivery of 1.5 million new homes over the course of this parliament, the Government has confirmed a new 10-year £39 billion Social and Affordable Homes Programme to kickstart social and affordable housebuilding at scale across the country. This is the biggest long-term investment in social and affordable housing in recent memory.