Consultation on VAT treatment of land for social housing builds

The government intends to provide 1.5 million new homes during this Parliament. Social housing provides long-term accommodation for the country's most vulnerable as well as for low-income families.

• Building more homes brings forward the need for more land to meet demand. 
• Housing developers and housing associations have been critical to the delivery of social housing and have suggested that the government do more to support demand. 
• The government aims to ensure that the VAT treatment of land better supports how social housing is delivered. 

The consultation wants opinions on introducing a new zero rate of VAT for the sale of land intended for the construction of social housing. The consultation seeks views on: 

• How current rules affect the feasibility and timing of social housing developments. 
• How the introduction of a new zero VAT rate on land for social housing might influence behaviour in the sector. 
• The design of the proposed new relief. 

The consultation is open to everyone, but is particularly relevant to:

• Landowners. 
• Housing developers. 
• Social housing providers. 
• Tax advisers and similar professionals. 

The consultation seeks opinions on the interaction of VAT rules for social housing delivery.

Social housing developments currently give rise to complex structures. 

• Developments typically include three parties: the landowner, the developer/builder and the provider of the social housing. 
• Once development begins, the developer constructs above the foundation level, known as 'the golden brick stage', before transferring title to the provider of the social housing to benefit from the construction zero rate. 
• Current VAT rules cause issues as the earliest point at which the zero rate can be applied is at the golden brick stage. 
  • Often, up to 60% of the development costs have already been incurred by the golden brick stage, which can create cash flow issues.
• Developers have also noted that transactions on a golden brick basis are costly and time-consuming, as developers need to monitor to ensure each house is above foundation level before passing the title to the registered social housing provider.
• The consultation seeks opinions on the current golden brick rules and whether there are any other areas where VAT rules on land that impact development activities.  

The government proposes to apply a zero rate to bare land that will be used in the construction of social housing.   

• The aim is that the new relief will enable providers of social housing to purchase and take title of land that will be used for social housing. 
• This removes the need for developers to build to the golden brick stage before qualifying for existing VAT relief.  
• The new relief will bring forward the transfer of title of the land and reduce complexity 

The consultation gathers opinions on how the relief can be administered and what safeguards are needed to protect against misuse.  

• The government believes that limiting relief only to registered providers will ensure that only those recognised and regulated can benefit. 
• This is to discourage the relief from being misused by those not building social housing. 
  • One suggested option to limit abuse of the relief is to require the registered social housing provider to produce a certificate supported by specified documentary evidence. 
  • Responsibility for accuracy would remain with the social housing provider.

Responses can be emailed to This email address is being protected from spambots. You need JavaScript enabled to view it. or submitted via HMRC's online form. The closing date for submissions is 18 August 2026.

Question 1: Are you responding as:

• A landowner.
• A developer.
• A social housing provider.
• Another type of organisation; please provide details (for example, a trade or representative body, charity, another type of business or organisation).
• A tax advisor.
• An individual.

Question 2: If you answered ‘landlord’, ‘developer’, ‘social housing provider’ or ‘another type of organisation’, please provide the following details of:

• The size of your organisation, for example, turnover and number of employees.
• Where are you established and where do you operate - across the UK, in England, Scotland, Wales or Northern Ireland?
• What are your organisation’s priorities when considering VAT implications in land acquisition and development?
• Please explain your operating model: (for example, what is your role in the process of constructing or developing social housing, please explain your partnerships with other organisations).
• How do you currently structure your organisation’s operations to comply with VAT rules on land, property and construction?

Question 3: If you answered ‘social housing provider’, please provide the following details:

• Whether you are a registered provider of social housing, meaning officially recognised and registered with the Social Housing Regulator in England, Welsh ministers, the Scottish Housing Regulator or the Department for Communities in Northern Ireland?
• What is your main source of funding for constructing new social housing and when are you able to access it? We would be grateful for any further information on this point

Question 4: Does HMRC/the government's understanding accurately reflect your knowledge of what happens in practice?

Question 5: What is your assessment of how the current ‘golden brick’ rules create barriers to the construction of social housing?

Question 6: Are there specific areas where VAT rules on land have a greater impact on your activities?

Question 7: What is your definition or understanding of the term ‘social housing’? (Please reference any statutory definitions that may be relevant, including planning regulations and legislation.)

Question 8: How would a new relief reduce the complexities in the current system and incentivise your business’s ability to develop social housing more quickly? (meaning accelerate the delivery of social housing to help achieve the government’s objective of building 1.5 million new homes).

Question 9: How would a new relief reduce administrative burdens for your business? (landowner, developer, social housing provider).

Question 10: What types of organisations do you consider provide social housing? (Please reference any regulation of bodies mentioned if relevant.)

Question 11: Are there any issues associated with limiting relief to registered providers? (Please provide any additional details that you feel will be relevant.)

Question 12: Are there any unintended consequences or risks you foresee with the introduction of this new relief?

Question 13: How frequently do plans for the development of social housing change? When plans do change, in what way do they change?

Question 14: What evidence can be produced at the point the land is sold to demonstrate that it has been purchased by a registered social housing provider, and therefore qualifies for the zero rate?

Question 15: Can you see any risks or complications with a declaration mechanism in the form of certification?

Question 16: Are there any unintended consequences or complications of mixed tenure developments? We are interested in understanding more about practical or delivery concerns that you think may be relevant in this context

Question 17: What additional support or guidance would help your organisation navigate the new VAT relief?

Question 18: Are there any other changes that you think should be included to make the new relief easier for you to implement?