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How To Encourage More House Extensions

It seems that many people believe planning permission is extremely hard to get and that it is the single biggest obstacle to construction. In response, the collation government in Westminster are floating the idea of increasing the size of house extension a homeowner can build without the need to apply for Planning Permission. This legislation wont affect my clients, as I practice Architecture in Scotland and we are subject to planning laws passed in Holyrood not Westminster. However, this is yet another example of too much emphasis being placed on the planning process. If the purpose of this law is to encourage construction of house extensions, then planning isn't the issue.

Take a look at my own record for example. All are domestic alterations or extensions and to date I made 45 approved applications. Two of those were refused initially and were granted after a second application; one in Fife the other in Perthshire. Of all the applications I have made, only one was an outright loss, it doesn't appear on the map but this is a link to the application and the appeal. Over four years and across seven councils, I have managed a first time success rate of 95%. If the government want to boost construction of house extensions, changing or removing planning permission isn't the problem. 

The problem is VAT.

I have written previously about VAT in the construction industry and since then things have not improved. Essentially if you want to build a brand new house, you will pay no VAT. But if you wish to alter or extend an existing house, you will pay VAT at the full rate. For most homeowners, this is an enormous hurdle to clear. I publish a guide to the minimum cost of typical house extensions on my website. Before VAT is added, one can expect to pay between £50,000 and £100,000 for a reasonable extension to a suburban family home. As VAT is 20% at present, this will add £10k to £20k to that bill, which is an enormous sum. 

While this reality might stop many people in their tracks, it will encourage others to look to the grey economy and pay cash to avoid VAT entirely. Both these outcomes are bad for the economy in general and the construction industry in particular. It either stops development dead or promotes cowboy builder who deliver terrible service and steal work from honest construction firms. 

Encouraging more house extensions will have other benefits as well; 

It will allow families to stay in the communities where they have put down roots, rather than moving to somewhere different to buy a bigger house and start over again.

It will take pressure off the housing market. By making better use of the houses we already have, we reduce demand for new homes. 

It will enhance the construction industry, because properly run, VAT registered firms tend to invest in training and equipping their tradesmen. Cowboys do not.

If the government are serious about encouraging construction they should scrap or significantly reduce VAT on house extensions. And since Westminster controls taxation for the entire UK, this will have a positive impact on my clients immediately. 


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