Lib Dems Target New Houses With £11 000 Tax Hike

Liberal Democrats advocates ‘equalising, on a revenue neutral basis, VAT on new housing build and renovation’ (Alternative Budget, 8 March 2002, p.24). However, Liberal Democrats are arguing for VAT to be levied at perhaps 5 or 7 per cent on all new homes.

The sale price of the average new property in the UK was £153,010 in Q1 2002 (source: Halifax press release, 26 June 2002). Thus imposing VAT at 7 per cent would add an average of £10,700 to the cost of buying a new property.

New properties account for 11 per cent of all property sales (source: ibid). This tax will just make housing less affordable and is a stealth tax on homeowners, particularly first-time buyers. It will do nothing to stop the wrong houses being built in the wrong places. It would act as an incentive for developers to build higher-profit, executive homes rather than lower-margin affordable housing.

Cllr Justin Tomlinson, 'The opportunistic Lib Dems are hell bent on taxing anything that moves, literally!  If they were a serious political party and ever in a position to implement this ridiculous policy, residents in the Abbey Meads ward could have faced an additional £11 000 tax hike on their house price!  Conservatives support the principle of tax incentives to encourage brownfield development, rather than tax hikes on new developments.'