“Golden brick” rules for social housing could soon change following the launch of a new government consultation, proposing changes to VAT relief.
Led by HMRC and the Treasury, the consultation is aimed at the people who deal with the problem every day – landowners, developers and registered providers.
Mary Waters, Partner in Thrings’ Development of Land team, takes a look what is being proposed and what developers need to know.
Why golden brick causes headaches
Right now, sales of land are usually exempt from VAT. Sellers can charge VAT instead by "opting to tax" – but that option can fall away when the buyer is a registered social housing provider, with the deal reverting to being exempt. This prevents the recovery of VAT incurred on acquiring the land etc.
Construction work, and the first sale of a finished home, are zero-rated instead. This enables recovery of VAT incurred on costs. The catch is that zero rating only kicks in once a building has surpassed foundation level with the "golden brick" – the first one to be laid – in place.
That timing gap matters. Developers often have to fund a large share of build costs – the government claims the figure is up to 60% – before they can transfer title and access relief.
Once you add in the administrative requirements of checking every unit has reached the right stage before handing it over, and you have a process that's slow, costly to monitor, and – developers say – ultimately passed on to the housing provider in the price.
What's being proposed
The consultation sets out a possible new zero rate for bare land bought by a registered social housing provider, removing the need to wait for golden brick at all. In principle, that means:
- Title can transfer earlier in the build programme, rather than being staggered plot by plot.
- Providers can access the grant funding tied to taking title sooner.
- Developers may see improved cashflow and less need for the three-way structure of landowner, developer and provider often demanded by golden brick.
What is being asked
A few areas to consider in the consultation:
- How the relief would work in practice. The government wants views on certification and on what happens if plans change later.
- Who counts as a provider. The current thinking ties eligibility to organisations registered with the relevant regulator in England, Scotland, Wales or Northern Ireland. If you work with partners who sit outside that strict definition, or use mixed-tenure schemes, this is your chance to flag it.
- What's actually holding things up. HMRC has set out its understanding of how the market operates. If that doesn't match your experience – on pricing, timing, or anything else – this consultation gives you the opportunity to correct them.
Why you should respond
The government has said explicitly that it wants to hear from developers about where the current rules create barriers. Housebuilders who routinely enter into golden brick arrangements are precisely the audience this exercise is aimed at, and the design of any future relief will be shaped by what respondents tell HMRC now.
That's true even if you don't fit neatly into the existing definition of a social housing provider – the government wants to know that too, so it can decide whether the definition itself needs to change.
What to do now
Take the time to read the consultation and respond by the closing date – 18 August 2026. Given how directly this could affect deal structuring, cashflow and pricing on affordable housing schemes, it's worth setting aside time to do it properly – ideally with input from whoever manages your golden brick arrangements day to day.
Taking legal advice before you respond is also strongly suggested, particularly if you require help putting together a response or want to understand what the proposals could mean for your business and your pipeline.
The Thrings Development of Land team are experienced specialists in all aspects of the built environment, working with landowners, developers and businesses. To find out how they can assist in the success of your development project, please get in touch.
