However, the traditional structure of golden brick is becoming increasingly unworkable. Waiting until the new building is substantially under construction before the land can be sold causes significant cashflow issues for the developer. While it may be possible, in principle, for the housing association to pay in advance of owning the land, we are finding Boards are increasingly reluctant to sanction this.
With more developments being land-led, the vendor will not normally be able to do the construction works required.
An alternative may be for a subsidiary to acquire the land and construct the building to this point. However, this comes with financing and SDLT issues.
I also question whether our understanding of when ‘golden brick’ is achieved needs updating. Traditionally this has been accepted as one level of brick above the damp proof course. However, this may not be the point at which many modern buildings would be seen as being ‘clearly under construction’. In particular, it does not fit well with modern methods of construction – if the walls of the building are currently off-site, have they been constructed yet?
You can read the full article in Social Housing magazine here.
This, and other VAT topics, were discussed in our VAT update webinar on 23rd February 2023. Listen to the recording of our webinar.