The problem
A staggering number of new housing units will be required in the next ten or twenty years. Many people are rightly worried about the encroachment on our countryside which this seems to imply.

Is it possible to meet these housing requirements without losing too much 'greenfield' land? Furthermore, can this be done in a fair way which will not give a few people unjustified windfalls while many others lose out?
In answer to these questions, we begin by making what looks like a long digression.

Land
All forms of wealth, including buildings, are the product of human effort and intelligence applied to natural resources. These natural resources are what economists call 'land'. The word includes not only the surface of the earth but all that lies buried within it, flows through it or surrounds it. Long, long ago, land was regarded as something fundamentally different from chattels, which people had made, like knives and tents. Chattels belonged to individuals; land belonged to everybody equally.

Then, over many centuries, this state of affairs gradually changed and some people acquired land as a personal possession. Their heirs sometimes continue to derive great wealth from those possessions to this day. To give but one example, in February 1998 it was reported that Earl Spencer had agreed to sell 400 acres of his Althorp estate for £50 million.

Land Value Taxation
In a complex society like ours, it is impossible either to treat all land as common property or to divide the land so that everybody gets an equal share. But the wealth that comes from the control of land can be shared equally if everyone pays into a communal fund a fair rent for the land he or she occupies. A fair rent would take into account the extent of a particular site, the natural fertility of its soil, the convenience of its location for trading, the agreeableness of its surroundings, its ease of access to transport systems, etc., but would discount what human effort had added to the site, like houses, offices or factories. This is known as Land Value Taxation or LVT. The revenue from LVT could enable many of our existing taxes to be reduced and, in some cases, disappear altogether.

Housing
How would all this bear on the housing problem? It is vital to remember that a 'house' consists 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. Land Value Taxation will allow us to make a good start in solving the housing problem by eliminating the waste and misuse of land that now occurs.

Urban sprawl has been encouraged by the high price of land within towns and cities. Builders and developers have moved out to districts where selling price and rents are lower. Plots of land suitable for housing, industry or commerce have been left empty, 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. A tax on the value of such land would discourage that practice and bring more land on to the market at lower prices. This valuation would be conducted on exactly the same basis as would apply if the owner were seeking to sell it – that is, the question would be how much the land would be worth to the prospective purchaser who could put it to its best use. A tax on such a basis would make brownfield sites more attractive to builders and developers.
Idle and derelict land within towns is both a waste and an eyesore. Although regeneration of decayed urban areas has been promoted by successive governments since the seventies, there still remain nearly 400 square kilometres of derelict land in England alone. This would be enough for three-quarters of a million 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. This 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 inevitably 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 therefore not enrich individuals or companies.

The upshot
Towns would be renewed without gain to speculators, and planners would be relieved from the pressure of landowners intent on maximising the rent from their plots. 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 on to 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. Land Value Taxation would increase our chances of protecting the countryside and improving the urban landscape.