The Bishop of St Albans received the following written answer on 24th May 2022:
The Lord Bishop of St Albans asked Her Majesty’s Government what plans they have to subject conversions and repairs on existing buildings to zero-rated VAT in-line with the VAT regime for new builds.
Baroness Penn (Con): The Government currently maintains a zero-rate of VAT on the construction of new build residential properties. This is to incentivise their construction and provide a lower burden of tax for purchasers of new homes.
Renovation and conversion costs are also eligible for the 5 per cent reduced rate of VAT, providing conditions are met. This includes conversions of buildings from one residential use to another, conversions from commercial to residential use, and the renovation of properties that have been empty for two years or more prior to the renovation work.
Expanding these reliefs to include all conversions and repairs would cost approximately £3.75 billion per year and would require reductions in spending or increasing taxes elsewhere. While all taxes are kept under review, the Government has no plans to review the VAT treatment of conversions and repairs on existing buildings at this time.