VAT Relief coming for developers who rent out unsold property

Due to current harsh economic circumstances, many developers are struggling to sell the residential units in their developments. To rent these out is an option in order to generate funds, but VAT legislation considers this a change in use of the property, thereby triggering VAT liability in the hands of the developer.
SARS took note and proposed amendments to the VAT Act as follows: if

• a developer rents out residential properties before their intended sale (that were constructed with the purpose of selling them in the normal course to the public); andthe 
• property is subsequently temporarily let;

then such supply by the developer will be deemed not to be a VAT-able supply.

The amendments are set to come into effect soon, but will be temporary in that such exemption will only be granted until 2015. In addition, it is limited to rental of a maximum period of 36 months before any sale of the property.