Proposed EU VAT Changes Could Prove Disastrous For UK Property Investors

27 November 2012 Categories: News

Proposed EU VAT Changes Could Prove Disastrous For UK Property Investors

The European Union Commission is currently holding consultations to determine whether changes to the EU VAT system should be made.

According to the Commission they want to create a simpler and more efficient VAT regime across the EU, but if proposals go ahead it could prove disastrous for buy to let investors within the UK.

One of the priority actions being proposed is the “abolition of those reduced rates which constitute an obstacle to the proper functioning of the internal market”.

This action would mean that the UK’s zero rate of VAT that currently applies to new house construction projects would be under threat. Obviously this news is worrying for buy to let and other property investors within the UK.

The Residential Landlords Association commented on the consultations, saying “The EU Commission has tried to play down the proposals, and claim that they are simply collecting evidence and information but the reality is that they want to abolish, or severely restrict, zero rating.

‘The EU’s proposals would make it even harder for aspiring owner/occupiers to get on the housing ladder. It would also have knock-on consequences for the landlords. This is because residential renting is an exempt supply so residential landlords cannot recover any VAT they have to pay. Landlords buying new properties will be affected in the same way, but the whole resulting increase would end up feeding through in time to the whole’.