This week, the Royal Institute of Chartered Surveyors is to lobby the finance ministers of the EU to reduce the high level of VAT on repair, maintenance and improvement of housing.

Currently, new housing in Britain is exempt from VAT, but people paying for the renovation of existing properties find themselves paying an extra 17.5% in VAT. The Royal Institute is arguing for that figure to be cut to 5% to create a level playing ground.

The argument, put forward by a coalition of bodies including CABE, the Civic Trust and English Heritage, is that the current level of VAT does little to incentivise people to keep their properties in a state of good repair and is out of line with the Government’s policy to regenerate large areas of the country by improving the existing housing stock.

It also pushes many people into the hands of cowboy builders who flourish in the black economy.

Changing the amount of VAT people pay demands legislative changes at a European level, so RICS is calling for housing repair and refurbishment to be put on the review list by finance ministers in the EU.

Michael Newey, European housing spokesman for RICS says: ‘A tax reduction will encourage more people to refurbish their properties and more importantly pull the rug out from under the feet of rouge builders.

We recognise that by reducing taxation levels on refurbishment, the Treasury may need to compensate by introducing VAT (also at 5%) on new housing, but we believe this would create a level playing field which for the first time will force developers of all types to consider proposals on their social, as opposed to taxation merit. This would encourage the re-use of empty property and brownfield land for development.’

As chair of the European Housing Forum, RICS will be presenting its views to a gathering of 25 housing ministers, from both EU and accession countries in Padua, Italy on Friday this week.