When you're ready to start developing again, make sure your tax policy is ready too
The new government’s ambition to build 1,500,000 new homes in England alone in the next five years comes on the back of most housing associations and commercial developers having reduced their development programme and capacity.
Some of the new measures to encourage this exponential growth will take some time to work through to spades in the ground.
In the meantime, there are three areas where developers can be preparing.
- Talking to potential sellers and obtaining first refusal if they are able to sell their sites. It is essential that confirmation of the VAT treatment forms part of these discussions to avoid an unexpected additional VAT and/or SDLT cost down the line.
- Considering whether you can create additional homes from your existing stock. Most residential property owners have under-performing assets which could be converted to a different use. There are several VAT reliefs available for this which should be used where possible.
- Getting your structure in order. If you decided not to have a design-and-build subsidiary because the pipeline of new homes under development was not large enough, it is worth reappraising this. If you do have one, but have not used it for a while, it is worth checking everyone understands how it should operate.
More information on each of these points can be found in our webinar series Getting ready to develop again and in my article in Social Housing magazine Social Housing - Comment - Make sure your tax policy is ready to start developing.
Adam leads our Social Housing tax team and our real estate VAT team. He provides VAT advice to housing associations, other non-profits, corporates, professional practices, private clients, and pension funds. He has a particular focus on VAT issues surrounding property investment, development, and occupation.
