In its budget recommendations, the Royal Institution of Chartered Surveyors warns that the 20% VAT rate could lead to the loss of 34,000 construction jobs by 2019.
RICS also wants empty property rate relief to be reinstated for 12 or 18 months as economic conditions allow. If the relief cannot be reinstated across the sector, small businesses and regeneration schemes should take precedence. Without reform there may be a lack of available properties to support economic growth, it warns.
RICS argues that empty property rates and the 20% VAT rate act as barriers to activity in commercial property and construction. Reform of these two taxes, including an extension of empty property rate relief and a reduction in VAT for repair and maintenance activity, would provide a significant economic boost. As well as increasing activity, changes would support regeneration, provide new property for growing businesses and help meet carbon reduction targets.
RICS says that now that spending cuts have been made in the Comprehensive Spending Review, the budget should be used to support innovation and growth in the economy.
It points out that every £1 spent on construction contributes £2.84 to economic activity and the industry employs around 900,000 people. Encouraging activity in the sector will promote economic recovery and provide sustainable growth in the long term, RICS says.
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