Homeowners across the South of England are putting off £2.7 billion of building work every year because they can’t find a builder they trust, the Federation of Master Builders (FMB) has warned ahead of next week’s Budget.
Research by the FMB and the HomeOwners Alliance shows many homeowners are taking matters into their own hands instead. Almost half (49%) say they would knock down a wall themselves rather than hire a professional.
Domestic electricity has been VAT-free since 1 October, but most home improvement work still carries 20% VAT, even when it makes a home warmer. The zero rate on energy efficiency measures like, insulation, heat pumps and solar panels runs out next March.
The Chancellor has the chance to simplify and extend VAT relief on home improvements, beyond energy-efficiency measures. Energy efficiency installations are often coupled with general household upgrades, leaving a complex invoice trail for builders to work out what is exempt from VAT and what isn't.
Ahead of the Budget, the FMB is calling on the Government to:
- Create a lasting retrofit market: extend VAT relief beyond energy-efficiency improvements, give homeowners long-term incentives to upgrade, and back the Warm Homes Plan so builders can invest in skills.
- Make planning work for smaller developers: more council planning capacity, dedicated planning officers for small builders, and fewer unnecessary costs on small sites.
- Open up development finance, so government-backed schemes actually reach small house builders.
- Strengthen consumer protection, proportionately: funding for mandatory licensing of domestic building companies.
- Help small employers train new entrants: cut the paperwork of taking on an apprentice, and fund a UK-wide network of Build Academies.
Charlee Jackson, Director of Jackson Build in Oxford, said:
“Small local firms employ the vast majority of construction workers, and we are feeling the squeeze from every angle: the cost of employment, higher corporation tax, rising material costs and the return of higher fuel duty, which will hit every van on the road.
“Our customers are feeling the pinch too. Between the cost of living and fiscal drag, homeowners are neither moving nor improving, and that hits the wider economy. New builds are zero-rated for VAT, so why not renovation projects? That would help homeowners and level the playing field between builders above and below the VAT threshold.”
Victoria Collins, Director of Kings Rock Construction Ltd in East Sussex, said:
“The Government talks about building more homes, growing the economy and tackling the construction skills shortage, but none of this can happen without supporting the small building companies expected to deliver it.
“Small builders are not just building homes. We’re creating jobs, developing apprentices and nurturing the next generation of skilled professionals. We need meaningful incentives for businesses taking on apprentices, a planning system that lets smaller builders deliver housing, and greater certainty around the rising cost of running a business. If the Government is serious about the future of construction, it needs to invest in the businesses building that future.”
Gareth Witts, Managing Director of Complete Project Solutions and a new member of the FMB South West area board, said:
“My big wish for this Budget is a VAT cut on home improvement work, in line with renewables and empty properties. We don’t just need to build more homes, we need to improve the ones we’ve already got. There are all sorts of incentives for renewables and energy efficiency, but who is going to put those features into dilapidated properties?”
Iain Kirtley, FMB Director for the South, said:
“£2.7 billion of building work a year is going nowhere in the South because homeowners can’t find a builder they trust. Almost half would rather take a sledgehammer to a wall themselves than call in a professional, and that’s how people get hurt and rogue traders get paid.
“The builders I speak to across the region are ready to do this work, train apprentices and upgrade our ageing homes. What they need is a VAT system that rewards making homes warmer, real support for the small firms training the next generation, and mandatory licensing so homeowners can tell the good builders from the bad. The Chancellor has the chance next week to unlock that work.”
