You don’t have to be a climate activist to want a more sustainable way of life. So why do UK tax breaks favour new-build developments over the restoration of heritage buildings?
Everybody recycles, right?
Sorting household rubbish into boxes rather than shoving it all into landfill seems like the very least we can do to offset the rapid march of climate change. But lately, we’re also being asked to reflect more generally on how consumerism is helping to create the throw-away society that’s responsible for landing us with mountains of rubbish in the first place. We can tackle the easy wins without breaking a sweat: substituting single-use plastics with reusable cups and bottles, swapping cling film for waxed paper wraps and buying refillable grocery products where possible. But longer-term solutions will probably require us to consider how we can repair and re-use the items we need before we toss them on the scrap heap.
Back in 2017, the Swedish government introduced a tax cut of 50 percent on the repair of items like clothes, shoes and appliances in a bid to make it more cost effective to extend the life of goods and dissuade people from automatically buying new replacements. Even with tax breaks, many would argue that low-cost items simply aren’t worth repairing but Sweden’s approach needs to be seen in the context of a wider strategy to promote sustainable consumption. If governments can move the needle towards buying quality items that – with judicious maintenance – can be used for longer, the shift to more responsible consumerism becomes an economically rational decision, as well as a moral one.
Which is what makes the UK’s approach to VAT on building projects all the more baffling. While the VAT on new builds is set at zero, renovation and heritage projects attract a VAT tariff of 20 percent – a figure that drops to 5 percent if a building has lain empty for two years or more. It feels to many of us that this flies in the face of sustainable development, as it actively discourages people from taking on buildings in poor condition, as well as ‘buildings a risk’. The scale of the disincentive means that few developers can afford to consign a large slice of profit to the bin, when they could make a quick gain by razing everything to the ground and starting from scratch.
This topsy-turvy strategy actively discourages the re-use of old buildings, in turn increasing the carbon footprint and risking the irretrievable loss of the country’s built heritage. In the UK, it’s estimated that the construction industry accounts for around 60 percent of all materials used, at the same time generating a third of all waste and almost half of all CO2 emissions. If the trend continues, our waste production will treble by the turn of the next century.
In Holland, experts are experimenting with the idea of logging and tracking the elements in buildings to create a ‘materials passport’ as part of the BIM process, enabling component parts to be recovered and reused in a future project. The Dutch government is linking tax incentives to materials passports and is considering bringing the requirement into law. It’s an approach that’s being replicated in forward-thinking countries across Europe – witness the patchwork façade of an apartment block in Copenhagen constructed using panels of bricks cut from the old Carlsberg brewery.
There must be an economic incentive to provide greater uptake, though. On our trip to Lisbon we toured a contemporary townhouse project where the developers retained the historic front facade to obtain a VAT reduction. If the UK’s VAT rules were changed to 5 percent across the board, we would encourage more re-use and therefore lower carbon emissions, as well as the retention of more built heritage and character, and an overdue re-balancing of the huge profits from the larger house builders.