Incentivise Refurbishment Over Demolition to Achieve Net Zero in Northern Ireland

• • Chartered Institute of Building (CIOB) says buildings in Northern Ireland at risk of demolition while more sustainable restoration options get ignored
  • VAT, set by Westminster, added to renovation but not demolition and new builds making it financially more attractive to knock buildings down
  • Decreasing demolition rates vital in drive to net zero says CIOB
  • Levy on demolition one option suggested by CIOB for NI Government to use devolved powers to level the playing field when Assembly reforms
  • Built environment accounts for 49% of UK’s carbon emissions.

Urgent action is needed to reduce the number of Northern Ireland’s buildings being demolished instead of refurbished if the country is to meet net zero targets, says construction industry body The Chartered Institute of Building (CIOB).

Currently, in the UK, renovation and retrofitting costs are subject to the standard 20% VAT, but demolition and new build is not, often making it more financially attractive to raze buildings to the ground than restore them, despite restoration usually being the more sustainable option. This has serious negative impacts on decarbonisation with both demolition and new build generating significant levels of embodied carbon as well as pollution, noise, traffic and disruption and waste, most of which ends up in landfill or being incinerated. The UK’s lack of VAT on demolition makes it an outlier compared with most other nations.

CIOB says this contradicts the principles outlined in the Climate Change Act (NI) 2022 and the 2022 Circular Economy Strategy for Northern Ireland.

Given that UK-wide tax reform appears unlikely, CIOB is proposing that, when the Assembly returns, the Northern Ireland Government use its devolved powers to implement a demolition levy – one that bypasses the current devolution settlement around tax – to level the unequal playing field that threatens the sustainability of the built environment.

Joseph Kilroy, Policy and Public Affairs Manager for Northern Ireland at CIOB, said: “We hear about the need to move away from a throw-away society and upcycle and recycle when it comes to things like clothes and furniture, and this needs to be extended to buildings too. At a time when so many decisions are cost-based, it’s wrong that carbon-intensive options are not subject to VAT when more sustainable options are. With the construction and operating of buildings accounting for so much of Northern Ireland’s carbon emissions, incentivising refurbishment and renovation needs to be a priority for Government in order to reach net zero by 2050.” 

The built environment accounts for 49% of the UK’s carbon emissions with heating, cooling, and lighting buildings, known as operational carbon, being responsible for the majority while the remaining is attributable to embodied carbon; emissions resulting from mining, quarrying, transporting, and manufacturing of building materials, in addition to construction activities, the repair, renovation and final disposal of buildings.

CIOB says a levy on demolition would also generate revenue, which could be used to fund initiatives that support energy-efficient upgrades to housing, help vulnerable households cope with the cost-of-living crisis, and preserve historic buildings.

Kilroy adds: “Introducing a levy for demolition and ensuring it’s not the best value option would create a tax environment that reflects the principles of Northern Ireland’s existing climate legislation and the urgency of the national net zero by 2050 target.”