Consultation on VAT Treatment of Land Intended for Social Housing
The government has launched a consultation on the introduction of a new zero rate of VAT for the sale of land intended for the construction of social housing.
The consultation seeks views on how the current VAT rules operate in practice and whether a new zero rate would help support the delivery of social housing. The proposed change aims to reduce barriers to building new homes and accelerate development.
Industry impact
Commenting on the consultation, Paul Hammond, VAT Partner at Cowgills, part of the Sumer Group, said:
“The government seeking views on ways to simplify VAT rules and remove obstacles to social housing delivery is extremely positive. Under the existing framework, developers may need to postpone the sale of land to housing associations for VAT reasons, while housing associations are frequently under pressure to complete acquisitions before funding deadlines expire. The proposed new VAT relief for social housing is a very positive step, as it seeks to recognize and remove the commercial pressures while preserving the VAT-neutral treatment.”
Potential benefits of a new zero rate
Under the current VAT regime, land can generally only be sold on a zero-rated basis once it has reached ‘golden brick’ stage. While this approach is designed to achieve a VAT-neutral outcome, it can create delays, complexity and increased costs.
Bringing forward the point at which zero-rating can apply should help streamline transactions and reduce both costs and administration in the delivery of affordable housing. It could also enable housing providers to accelerate the delivery of much-needed homes.
How Sumer is supporting the consultation
Sumer welcomes the consultation and the opportunity to contribute.
The consultation closes on 18 August 2026, and Sumer will be submitting feedback as part of the consultation process. We encourage clients, developers, housing associations and other stakeholders to share their thoughts, experiences and views with us. Your input will help inform our response and ensure that the practical implications of the proposed changes are fully represented.
If you would like to contribute to Sumer’s consultation response or discuss how the proposals may affect your organisation, please get in touch with your usual Sumer contact.
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