VAT boost for building industry

VAT WILL be cut to 5% on social house-building as part of an urgent plan for the construction industry to create 45,000 jobs while building 500,000 new homes a year for the next four years.

President Hollande revealed the plan with 20 measures to “lift off the brakes” on the industry which saw a 20% drop last year in work starting on new building projects. The plan includes moves to simplify planning procedures and standards to speed up construction starts and aid of up to €1,350 for households to do renovation work to increase energy efficiency.

At present VAT on social housing is 7% but it was due to increase to 10% at the end of this year and Hollande said it would be reduced to 5% from January 1, 2014 “meaning all building work which is just starting will benefit from VAT at 5% once it is completed; that means next year”.

The move will cost €600 million and in return social housing groups must commit to building 150,000 homes a year.

Alongside this, the government is to spend €500m funding the energy efficiency programme with €1,350 grants available to households whose income does not exceed €35,000. That should benefit two thirds of the population.

Environment Minister Delphine Batho said that households taking advantage could see “a 25-30% reduction in their gas and electricity bills”.

Hollande said he would issue decrees to cut red tape in planning regulations and delay the introduction of new standards with the aim of halving the average delay between proposing a project and getting it started.

At present the average delay is three years.

Hollande said the industry needed a “confidence boost” to address the “economic, social and environmental urgency” of the lack of affordable new homes.