VAT on New-build homes only a matter of time

[Philofacts]

There is a current anomaly that if you refurbish a house it inucurs VAT at 20%.
However, building a completely new home is totally exempt.

There have been a few high profile cases (some in conservation areas) where perfectly good homes have been demolished and replaced with new larger homes as a way of avoiding a VAT bill on large renovations and extensions.

Last year the Liberal Democrats proposed a flat rate of 5% VAT on both new and existing properties.
This was rejected by the Tories who were concerned it would put up the prices of new build homes and hurt the fragile new homes maket.

However the issue of VAT on new homes has not gone away altogether.

[Albert]

It does seem strange that there is a zero rate on new homes.
I suppose that any rate would kill demand for new homes stone dead overnight and cause a scramble to buy just before an introduction deadline.