It is only very rarely that the upfront carbon emissions are less when demolishing and starting again, often using the original foundations. Usually it is in the case where a building is in such a poor state of repair that making it safe would require a huge carbon input.
Converting a building you find to your dream (super energy efficient) home often needs more imagination that starting from scratch but the results can be very rewarding.
There is a huge problem that new build is vat free but renovations only partially exempt. These issues are repeated in costs of road and rail and many other areas. Has anyone summarised the real costs of how we do things compared to how we currently tax and subsidise them?
Now you have hit the nail on the head. The Carbon budget and financial one have no alignment. Now if VAT and Corporation Tax could be aligned with carbon rather than Pounds, the government could still balance its books (as if it ever has!) without the current anti environmental effects.