Property: Do not pass Go, do not collect grant: The property game can be tricky when you own a listed building, but there are ways to win, says David Lawson

WHEN Kit Wedd bought her new home she asked the solicitors if it was listed or was in a conservation area. 'They didn't know. This sort of information doesn't seem to be considered important,' she says. But it is. Move a fireplace, change a door, or merely paint the outside without asking the right people, and you could, theoretically, be sent to jail.

Certainly you would have to put things back as they were - perhaps years after work had finished. Do it the right way, however, and grants or tax rebates cover most of the cost of renovation.

Owners are generally in the dark over both risks and rewards - particularly a VAT loophole worth millions of pounds that could soon be closed. Ms Wedd, an expert with the Victorian Society, knew to ask.

Around 90 per cent of the 700,000 buildings listed as historically important are ordinary homes. Yet they come under the same strict planning rules as castles, requiring special consent for even the most mundane changes. 'People also fail to realise the interiors are often just as protected as the outside,' says Ms Wedd.

The impact is actually far bigger than the figures suggest. Whole terraces are lumped together under a single entry on the Government's lists, says Adrian Dobinson of the Renaissance Partnership, an adviser on old buildings. Another 700,000 houses also lie in conservation areas.

That means 1.5 million owners could be entitled to grants for renovating their property. But of the pounds 100m allocated each year, only about pounds 15m goes into repairs, says Mr Dobinson. Most people are defeated by ignorance, apathy or bureaucracy; those who persevere can receive handouts of up to pounds 30,000.

An even bigger pot of gold lies deeper in this bureaucratic labyrinth, however. By a quirk of the tax laws, VAT is not charged on renovation of listed buildings. At least, that is the letter of the law, but you have to go through a detailed procedure to qualify. This is well beyond the ken of the average owner - and some experts.

Planners, rather than taxmen, make decisions on whether work such as rewiring, replumbing and window replacement justifies VAT exemption, says Mr Dobinson. But many get it wrong. Builders and architects can also fail to exploit the loophole. He blames the Government for keeping everyone in the dark in an effort to save an estimated pounds 450m a year.

'We know that around 2,500 owners of listed buildings claim pounds 40m- pounds 50m a year in rebates. But some 100,000 fail to apply through ignorance or because they are badly advised,' he says. A typical claim wipes 95 per cent off the VAT charged on repairs.

Raymond Hall fought hard to have the basement of his south London home declared a piece of history. He seemed to have a strong case because the outside was listed and the preservation order also specified the hall and ground floor, up the stairs and including the first-floor doors.

He failed, despite long discussions with the local conservation officer. But he did obtain approval to take out a dividing wall to return the large ground-floor room to its original Georgian size. The delicate coving was repaired and two original fireplaces renovated - all within the VAT-free zone.

'We did not move or replace them,' he says. 'The first rule to remember with listed buildings is never to move anything unless you have to.'

Additions can also be a problem with conservation authorities. Long talks went on over the new glazed hall door, which could have been VAT- free, too, if it were seen as a reinstatement of an original feature. It qualified as an alteration, but these are frowned upon by conservationists. Mr Hall had few problems picking his way through complex rules over eligibility for tax exemption because he is an architect. His practice, People & Places, specialises in socially-aware projects with access for disabled people - which are also VAT-free. But he says builders should know not to charge VAT for certain work.

Mr Dobinson says most owners end up paying too much because contractors fail in this duty. Planners can also cause problems. They give the go- ahead for work to start, not realising this blocks any grant claim, as projects must be approved in advance. They also refer tax inquiries to VAT officers. 'Fewer than a dozen people in this country know the right way to cross this minefield,' he says. VAT can be reclaimed long after work has been carried out, but Mr Dobinson says it is better to use a specialist right from the start. This is not cheap: Renaissance, for instance, asks pounds 150 to pounds 250 for a two-hour consultation on site and making initial inquiries with planners. Further work is then charged at pounds 30 an hour. But he says this outlay is more than covered by recovering up to 95 per cent of VAT. Typical current concessions are around pounds 18,000 per building.

This secret largesse will not last, however. The EC has given Britain a deadline of 1996 to fall into line with the rest of Europe on VAT. Fuel is already being brought into the net and buildings could be next - perhaps as soon as the November Budget. The Government is also rethinking grants. Consultation papers have gone out proposing more selective listing of buildings, and English Heritage plans to dump the administration of ordinary homes on to local authorities, many of which cannot cope with the complexities.

If the roof is leaking or the wiring needs replacing, it may be worth getting it done now. But make sure you know the right language before jumping into this bureaucratic stew.

Renaissance Partnership, Queen Anne House, Charlotte Street, Bath BA1 2NE (0225 314426); The Victorian Society, 1 Priory Gardens, London W4 1TT (081-994 1019); Society for the Protection of Ancient Buildings, 37 Spital Square, London E1 6DY (071-377 1644); Georgian Group at same address (071-377 1722).

(Photograph omitted)