Brokers have welcomed a plan from Labour leadership candidate Ed Balls to slash the rate of VAT on home repair, maintenance and improvements.
Shadow Children and Education Secretary Balls suggests cutting VAT to 5 per cent for home repairs and improvements and pumping £6bn into affordable housing.
He says the moves could be paid for as the public finances are £12bn healthier than forecast in the March Budget.
John Charcol senior technical manager Ray Boulger says lowering VAT for home improvements has considerable merit.
He says: “There are going to be more people who contemplate building an extension rather than moving. It is likely to be easier to borrow an extra £20,000 to build an extension than to get a whole new mortgage.”
But Boulger is more sceptical about spending huge sums on affordable housing. He says a better route would be to improve the previous Government’s HomeBuy scheme.
Balls called on Labour to admit where it went wrong with housing policy. He says: “Labour leaders over several decades never paid enough sustained attention to housing to make it the priority it deserved.”