Housing Shortage?

As there are several hundred thousand empty houses in this country the idea of a housing shortage seems somewhat absurd. This paper suggests a way in which these houses could be brought into use. The long-term problem when in ten or twenty years time the increase in popuiation will require substantial number of housing units to be built can aiso be solved with the same methods used to bring empty properties on to the market.

Land

it is vital to remember that a "house price" is made up of two entirely different things: the building, which was set up by human effort, and the land on which it rests, which no human being has made. Unfortunately land has over the years become a personal possession and is bought and sold as if it had been made by the owner. Originally, of course, land was a free gift from nature but ownership was claimed by force of conquest and then passed on by inheritance or sale.

Its value is related to the fertility of the soil, the convenience of location, the agreeableness of its surroundings, its ease of access to transport systems, hospitals, schools, fire services, the police, refuse collections and the many other services paid for - not by the landowner - but by taxpayers generally.

Why should a free gift the value of which has been enhanced by other people be sold as if its value was created by the landowner? What the landowner has created on the site - houses, offices or factories, is his and can be sold as such.

Land Value Taxation

Once the difference between the land value and the property value has been established then it would be logical to take the annual rental value of the land for the benefit of the community because the community created it. This is known as Land Value Taxation (sometimes called Site Value Rating when proposed as a local tax).

Because land has been bought and sold for generations it would need to be introduced gradually with other taxes such as income tax and VAT reduced to compensate.

With LVT in place people would not be able to afford to keep houses empty and the hundreds of thousands of empty houses will soon come on the market.

Plots of land suitable for housing, industry or commerce have been left empty for various reasons - often because the owners had acquired their plots in anticipation of a future price rise and were able to hold on to their land without putting it to profitable use. They could not afford to hold such land out of use with LVT in place and would either develop the site or sell it to someone who will. A tax on this basis would make brownfield sites more attractive to builders and developers.

Idle land within towns is a deplorable waste. Derelict land is an environmental eyesore. Although regeneration of decayed urban areas has been promoted by successive governments since the seventies there still remains nearly 400 square kilometres of derelict land in England alone. This would be enough for 750,000 new homes at 8 to the acre.

Tax Reduction

As has been seen, one effect of LVT would be to allow other taxes to be reduced. At present, VAT is charged at 17.5% on rebuilding, while there is no VAT on new building. This is one of the factors which inclines builders to prefer greenfield to brownfield sites. Why not make a start in tax reduction by removing VAT on rebuilding?

Removal of taxes on improvements would also help the reclamation of derelict land which is seriously polluted and expensive to reclaim.

The problem of cleaning up polluted land must be tackled in various ways and not exclusively by VAT. Allowing those who regenerate derelict land to benefit fully from their enterprise and labour would make it more likely that these blots on the urban landscape would be transformed into places where people would be happy to live and work.

Planning Permission

Planning permission can raise the value of a site by millions overnight - a situation that ineviatably introduces the temptation to corruption in public life. 'A tax on the value of land would remove this temptation because the increased value of the land would be collected for the benefit of the community and would not enrich individuals or companies.

The upshot

Towns would be renewed without gain to speculators, and planners would be relieved of the pressure of landowners intent on maximising the profit from undesirable developments. The will of the community would become the deciding factor in planning decisions.

Land Value Taxation would work to do away with waste of natural resources and of human resources. It would extend production onto all appropriate sites, thus increasing opportunities for employment and raising real wages. A more prosperous community would be in a position to demand a higher standard of design and construction. The use that was made of this power would depend on current taste and prevailing ideas, but opting for fairness and equal opportunities through LVT could only increase our chances of protecting the countryside and improving the urban landscape.