VAT treatment of land for social housing

The government has released its consultation on reform to VAT rules to incentivise development on land for social housing. 

Under current VAT rules, land can only be treated as exempt (likely VAT cost for vendor) or standard rated if opted to tax (likely VAT cost to housing association).  This often leads to the site not being transferred until construction reaches the ‘golden brick’ stage – a point in the process where a building has progressed beyond foundation level so that it’s ‘clearly under construction’.  At or after golden brick stage the VAT liability of the transfer is zero rated meaning no VAT is charged by the vendor and the vendor can also recover any VAT incurred on its associated costs.

This introduces delays, complexities and additional costs into the development process.  The government has recognised that these inefficiencies could be overcome through a simple change to VAT rules: zero-rating the sale of land to registered providers.

The consultation will be run for 8 weeks from 23 June 2026 to 18 August 2026 

Join us to discuss the consultation and feed into the response by Cubed Tax and CHC.