Almost half of homeowners (42%) hit a brick wall finding a builder. Meanwhile a third (31%) pay cash to avoid VAT to afford home improvements.
Homeowners put off renovating homes, particularly in London, latest research reveals
- 8 in 10 (79%) home owners have faced obstacles with their home improvement plans – levels highest in London at 87%
- Difficulty finding a reliable builder is top obstacle – approximately 7.2 million homeowners (42%) affected
- VAT costs are deterring almost a quarter (23%) – roughly 4 million homeowners – a MUCH bigger issue than Brexit (15%)
- A third (31%) – approximately 5.3 million homeowners confess to paying cash to avoid VAT costs on home improvements
- Planning permission is stopping or delaying more than a quarter (27%) of homeowners from carrying out necessary home improvements. A shocking 4.8 million people are affected
Brits are struggling to find decent builders and many are paying cash in hand to get their home repaired or done up, shocking new research reveals.
According to the Homeowners Survey 2019, polling more than 2,000 UK adults online, on behalf of HomeOwners Alliance and Resi.co.uk, eight in ten homeowners (79%) reported issues stopping them from renovating. The survey was carried out by YouGov.
The study found that this level was highest in London, with 87% of homeowners being prevented from pressing ahead with home improvement plans because of a list of obstacles, including the difficulty of finding a trustworthy builder and the planning system.
Paula Higgins, Chief Executive, Homeowners Alliance, says:
“We know from our recent Home Owner’s survey that 32 million Britons believe that our homes aren’t ‘fit for purpose’. But our current system is stopping millions of people from investing in their homes and makes them prey to rogue traders because of the extra 20% they have to pay in VAT to government.
“We need the Government to slash VAT on home refurbishment. We have been campaigning on this for years. Many homeowners can only afford to do essential repairs and maintenance by going to the black market, so it is obvious that urgent reform is necessary.”
Alex Depledge, CEO of Resi.co.uk, says:
“This study proves definitively how difficult it is for ordinary homeowners to renovate. Whether it’s our out-of-date, inefficient planning system, difficulty finding a good builder, the high cost of VAT on building work, or simply a lack of confidence in a process which is unnecessarily confusing, there are so many things to surpass.
“Frankly, it’s not surprising that so many people are struggling. In order to extend, most people have to undergo a huge amount of education about what they need to do, usually when another major life event is happening, such as a pregnancy or the birth of a child.”
For more information on the HomeOwners Alliance Cut the VAT Campaign click here: https://hoa.org.uk/campaigns/cut-vat-on-extensions/
Finding a trustworthy builder is the biggest obstacle
The research showed that 7.2 million homeowners (42%) are put off improving their homes because they struggle to find a reliable builder, revealing the inefficiency of the UK’s construction system.
Paula Higgins, Chief Executive, Homeowners Alliance, says:
“This is an unregulated sector and this aspect needs to be reformed. It is unacceptable that there is no regulation for an industry so fundamental to how we live – for those who build the homes we live in.
“In addition, the shortage of construction workers is at a record low. We are not training a strong enough workforce as we have a lack of apprenticeships across the industry. Many construction workers are on zero hours contracts and, like many other industries, construction has been affected by a staff Brexodus.”
Alex Depledge, CEO of Resi.co.uk, says:
“We have a systemic lack of construction workers in the UK, which we’ve had for a while, and that Brexit is only going to worsen. Shockingly, for an industry which builds the backbone of the economy, it’s unregulated, with a serious lack of transparency. There is no career path laid for the sector and little governance or accreditation.
“The overall quality is so varied, depending on who you are lucky – or unlucky enough – to get. It’s no wonder that finding a reliable builder is such a big obstacle for people when it comes to renovating their homes. There needs to be urgent reform to regulate the industry, so that people know what they are getting and can easily find a builder they can trust.”
Planning permission is a barrier for more than a quarter (27%) – 4.8 million homeowners
Paula Higgins, Chief Executive, Homeowners Alliance, says:
“It is local councils that make planning decisions, but their budgets have been cut back to the bone by central government. The upshot is planning departments with sky-high backlogs. While some local authorities have done well generating finances, for example, selling land to developers, others are struggling.
“When we have a housing crisis on our hands this lack of joined up thinking is breathtaking. We need local authorities who are managing to stay on top of planning to share good practice with others and for central government to offer a cash injection to planning teams to solve this crisis.”
Alex Depledge says:
“Our planning system isn’t fit for purpose. Our independent research at Resi shows that planning departments have been cut to the bone over the last decade. It’s no wonder that widespread delays and a lack of clarity make it a serious issue for so many homeowners.”
The cost of VAT puts off almost a quarter (23%) of homeowners from progressing home improvements – 4.0 million homeowners
Paula Higgins Chief Executive, Homeowners Alliance, says:
“It’s concerns about VAT – not Brexit – that are stopping homeowners making home improvements. Homeowners struggling to afford home repairs and renovations will obviously be tempted to pay cash.
“But there is a huge risk of not getting a receipt for the work: they have no proof that builder, carpenter or electrician has done the work – and therefore no guarantee that if things go wrong they will come back to put things right.
“For several years the Home Owner’s Alliance has supported the cut the VAT campaign. We need VAT to be slashed to a minimum 5% – otherwise a black economy is being fuelled and government is tacitly green-lighting this.”
Alex Depledge, CEO of Resi.co.uk, says:
“Buying a home is the largest purchase most people will make and renovations are often their second largest lifetime spend. And if you’re spending £100,000, which is an extraordinary amount of money to save up – or take out on top of your mortgage – and then have VAT slapped on top of it, it can become impossible.
“But VAT on building work doesn’t just affect consumers. Builders are also affected. For smaller operations, working below the VAT threshold, it can become extremely difficult not to succumb to the temptation to take some aspects of a project off the books.”
Black market booming thanks to VAT
Almost one third (31%) of homeowners have paid cash to avoid VAT cost on home maintenance and improvement jobs. That makes 5.3 million homeowners.
Paula Higgins Chief Executive, Homeowners Alliance, says:
“Our current system is inadvertently forcing homeowners to be dishonest. Many people have cash to build an extra bedroom for their growing family or to have a downstairs loo put in for their elderly parents. Government needs to have some focus and cut VAT right back to a maximum 5%.
“It’s been demonstrated that this could give at least a £15 billion boost to our economy, creating thousands of jobs. The current short-sighted system means that Government are actually doing themselves out of money.”
Alex Depledge, CEO of Resi.co.uk, says:
“The reality is that this figure – while shocking – is almost certainly just the tip of the iceberg. We all know someone who has paid cash in hand to avoid paying VAT, it happens all the time. But this black market makes homeowners vulnerable. There is no recourse when something goes wrong if you’ve paid cash in hand.
“At Resi we are calling for a simplification of the rules around VAT. Previously we would have called for the rate to be reduced to 5%, in line with EU law. However, if we do end up exiting the EU, VAT on construction work could be suspended completely. This could be a rare silver lining to Brexit, kickstarting the UK’s construction industry just when it needs it most.”
Brian Berry, Chief Executive of the Federation of Master Builders (FMB), says:
“Reducing VAT on housing repair, maintenance and improvement work could boost the UK economy by more than £15bn over a five year period, according to independent research by Experian. A reduction in VAT could also create more than 95,000 jobs and save 240,000 tonnes of carbon dioxide from thousands of homes.
“This proposal has the backing of more than 60 charities, trade associations, business groups and financial firms as there is no other policy that will help the UK achieve so many of its economic, environmental and social aims with so little cost to the public purse. At a time of continued political uncertainty and a dip in construction output, this is exactly what the UK economy needs.”
Case study
Alice Barlow*, 64, a landlady, lives with her husband near Warwick and has two adult children. The owner of several properties, she has been asked to pay cash-in-hand many times for renovation work and says the problem has worsened recently.
She says: “We own several properties, so I’m fairly used to getting quotes for building work. But I’m currently doing up a house in Devon and have been genuinely shocked by how widespread the black market for building work has become. Virtually every one of the tradesmen and craftsmen we have used on the project has hinted – or said outright – that they would like to be paid in cash. The builders we met didn’t specifically say it was to avoid VAT, but of course this would be the result if we had agreed, because they are a big enough firm to require charging VAT on projects.
“But we wouldn’t dream of paying cash for large projects. It would be hard to avoid the impression of money laundering or something else fishy if we kept withdrawing fistfuls of £50 notes. My father was a Lloyd’s Bank manager and I’ve been extremely law abiding all my life.
“If I’m paying a local gardener to do a bit of mowing, I don’t mind paying them £20 in cash because they are almost certainly operating below the VAT threshold.
“That simply isn’t the case with many of these larger companies, who might ask you to pay in instalments of cash. I think the problem has gotten worse recently because there’s been such an influx of builders into the market and so many people are feeling the pinch. As a property owner, I can see an increasing sense of desperation fuelling this black market. And, of course, many homeowners are only too happy to oblige.”
*Not her real name.
Kindly shared by Home Owners Alliance
