29 Sep 2021
The G15 has urged the government to remove VAT on fire remediation works as it estimates that its members’ overall spend on building safety will hit £3.6bn by 2036.
In the group’s Treasury submission ahead of next month’s Budget and Spending Review, it calls for a zero VAT rate to be applied in future and retrospectively to “maximise the investment” its members can make in dealing with the post-Grenfell building safety crisis.
“We believe that zero-rating VAT on building safety activity, alongside making spending in recent years VAT-recoverable, is a sensible and proportionate move that will allow more resources to be directed at fixing the problems we are facing,” said the submission, seen by Inside Housing.
The document added: “Taking the G15’s £3.6bn VAT-inclusive spending plans, removing VAT could potentially make £720m of this resource available to support works and related activity rather than being lost to taxation.”
The group, which represents London’s 12 biggest housing associations, has also released the newly revised £3.6bn figure based on what it now expects the building safety crisis to have cost its members between the 2019 and 2036 financial years.
The G15 had previously forecast a spend of £3bn over the next decade. A spokesperson said the new timeframe “more accurately reflects the scale of the financial impact of the building safety crisis”.
The group, which collectively manages around 600,000 homes, expects the peak of spending to come in the 2023 financial year with £458m collectively forecast to be invested in those 12 months. Around £455m has been spent since 2019, according to the G15.
The £3.6bn figure is the equivalent to what housing associations would have to invest to build 72,000 affordable homes, the G15 said.
Writing in Inside Housing, the G15’s chair Geeta Nanda said: “Building safety continues to be the most significant challenge facing housing providers of all shapes and sizes.”
She added: “As well as living up to commitments that have been made to protect leaseholders from significant costs, there are practical steps like removing VAT from remediation works that the chancellor could and should take to maximise the value of resources that are being invested.”
The group also calls for the government to allow social housing providers to access its Building Safety Fund, regardless of tenure.
Currently, social housing providers are only able to access the government fund for costs that would otherwise have to be met by leaseholders in buildings taller than 18 metres. The group has also urged ministers to protect leaseholders from building safety costs by fully funding remediation works that cannot be recovered via insurance and warranty.
The G15 itself said it forecasts that its members will be able to recover around £904m in costs via insurance and warranties over the 2019 to 2036 period.
Ms Nanda added: “We urgently need the government to protect leaseholders from all remediation costs, and to give social housing providers full access to an expanded Building Safety Fund to support delivering works that are needed.”
Elsewhere, in its submission the G15 has called for the government’s £3.8bn Social Housing Decarbonisation Fund to be allocated over the next five years, instead of the 10 years currently outlined.
The group has also urged ministers to maintain the £20-a-week Universal Credit uplift and extend it to all “legacy benefits” while “ensuring Local Housing Allowance rates rise to meet growing costs”. The Universal Credit uplift is due to be cut on 13 October.
Chancellor Rishi Sunak is due to present the government’s Autumn Budget and Spending Review on 27 October.
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