Thursday, 1 August 2013

Reader's Letter Of The Day

From yesterday's Evening Standard (page 41, top left):

Don't blame the planners for the lack of land for housing in London (July 26).

There is enough land with planning permission for many thousands of new homes. Developers are not building on these sites either because of lack of finance or because they expect land prices to rise and are speculating.(1)

The Coalition has made many promises to solve the housing crisis but instead fuels the next land price bubble by under-writing homebuyers' deposits. As planning minister Nick Boles has previously admitted, the only way to seriously deal with this speculation is to tax vacant urban land on an annual basis.

While this would cause a temporary fall in house prices it would also make the existing homes more affordable to first-time buyers and stimulate the housing market, with a knock-on benefit to the wider economy.

Dr Tony Vickers, Professional Land Reform Group.


1) Actually there's a contradiction there. If the banks (or others with a bit of spare cash) are unwilling to lend to developers, that must mean they fear price falls; if the developers are hoarding land, that must mean they expect prices to rise. They can't both be right.

25 comments:

DBC Reed said...

Lets see: who campaigned long and hard for the taxation of land banks ? Answer: Chris Huhne.

Bayard said...

Ah, that's what it was, was it? I thought he must have upset someone influential.

Bayard said...

"While this would cause a temporary fall in house prices"

While what would cause a temporary fall in house prices? This looks like another outing for that economic myth I mentioned earlier. Anyway, since the good Doctor has mentioned the non-existent housing crisis, he quite clearly doesn't know what he is talking about.

Dinero said...

Actually he says in the last praragraph that a FALL in house prices would STIMULATE the housing market, that is a novle use of the popular vernacular used about the property market , but I think we know what he means

Mark Wadsworth said...

DBC, yes but CH is a self-serving pompous twat who achieved little if anything.

B, yes it would cause a temporary fall in house prices - this might only last six months or a year, but in the very short term, there would be a dip.

'Housing crisis' is just one of those phrases which people bandy around, I'm sure that Tony's original letter was longer and slightly more circumspect.

Tony is One Of Us and I have met him quite a few times, he knows exactly what he is talking about.

Din, exactly. The market = people buying and selling, so more transactions = the market is stimulated.

Instant boiling water said...
This comment has been removed by a blog administrator.
Kj said...

MW: "Housing crisis" is indeed a nonsensical word. AFAIK, noone goes homeless because of a lack of physical housing in the UK, as in rooms where everyone could potentially sleep, cookand go to the bathroom. If "housing" falls 20 or 30%, the same housing is there, the same demand is there (evidence; the rents people are willing and able to pay), and these rents are and will always be enough to finance the building of actual, physical houses.
It's like saying that the fall in prices of LCD-TVs constituted a "LCD-TV-crisis", when evidently, more people have access to LCD TV's than ever before. A fall in "housing" is a crisis in finance.

Bayard said...

"yes but CH is a self-serving pompous twat who achieved little if anything."

Self-serving, pompous twat or not, CH is just another in a long line of pols who were suddenly found out in some scandal when they weren't toeing the party line. Compare and contrast CH with the likes of Peter Mandelson.

"yes it would cause a temporary fall in house prices - this might only last six months or a year, but in the very short term, there would be a dip."

In practice, I doubt it. The developers would rush to get a builder on site, so that the land was then not "vacant", then dribble out completions at a rate that kept prices unaffected.

Mark Wadsworth said...

Kj, all the pol's say "housing crisis" but it's never really clear what they mean - do they mean that housing is too expensive? They never really say so.

B: "The developers would rush to get a builder on site, so that the land was then not "vacant", then dribble out completions at a rate that kept prices unaffected."

Let's assume that the tax is designed intelligently; at a bare minimum, each plot gets made liable to Business Rates from the minute it gets planning.

If a normal business has to pay B Rates on the land it is using in its business (factory or offices etc), why wouldn't a construction ccompany be liable to B Rates on the land it is using (to build houses)? Where is the conceptual difference?

Bayard said...

"Where is the conceptual difference?"

Dunno, do developers pay business rates on building sites at the moment?

Mark Wadsworth said...

B, no they don't, which is insane, but there's all manner of other crap like SDLT, planning fees and s106 agreements etc, which ought to be got rid of to show there's no hard feelings.

Exempting such sites from B Rates is about as insane as giving people fuel duty rebates if they leave their engines idling for long periods.

The Stigler said...

Sorry guys, but where is this evidence for land banking? It's around 2 years reserve in most builders last time I heard, which is hardly excessive (especially when you consider lead times).

That said, yeah, LVT would force anyone who was doing so to do so.

Mark Wadsworth said...

TS, they've got more like four or five year's supply. This is not normal. Have they also stockpiled all the bricks and timber for the next five years? I doubt it.

Think about it, if there were 400,000 builders with no other source of income in this country (OK, it's probably a bit less than that, but not much) and they own one plot with planning each, what is their individual optimum course of action?

It must be to get the house built, or else they are just putting themselves out of work.

But because a few large corporates own these 400,000 plots, they can afford to make all their sub-contractors unemployed for the time being and just sit tight and see how well Help To Sell works.

DBC Reed said...

@MW
Slightly off-topic : But did you see Max Keiser last night? He has stolen our act! He even had some right-wing Englishman going on about a Land Tax to end "the cult of home ownership" as they called it. Suggest you invite yourself on the programme and provide some much needed calm to proceedings. (Not too much calm. You could attempt to outdo him in going apeshit.)

Mark Wadsworth said...

DBC, I watched a couple of minutes but then I changed channels (unfortunately, as it transpires).

Who was the "right wing Englishman"?

Bayard said...

"no they don't, which is insane"

Well, there's your answer, no need for a special tax on vacant land. All land with planning attract business rates until it is sold as residential, at which point it becomes liable to Council Tax. Simple change, but I can't see it happening. Landowners rule!

Mark Wadsworth said...

B, well yes, it is true to say that most LVTers take little interest in how the tax system actually works, and the fact that B Rates is pretty close to LVT seems to elude them.

The purists point out that B Rates is different to LVT as B Rates only applies to complete, useable and occupied buildings (or car parks) and not to derelict or undeveloped urban land, but that is a minor tweak.

There again, the Homeys and Faux Libs know f- all about the tax system.

The Stigler said...

MW,

TS, they've got more like four or five year's supply

Four or five years of land with planning permission?

Mark Wadsworth said...

TS, the official figure given for total plots with planning as yet unfinished (or not even started) is in the order of 400,000 to 500,000.

They are completing just over 100,000 a year.

DBC Reed said...

@MW
The right -wing Englishman is Dominic Frisby who appears to be an actor part-time political commentator. There is a video which is entitled: [KR478]Keiser Report: KoolAid Bubble Mentality.
I would be very surprised if you could not do better on the show than Frisby, a lightweight.

DBC Reed said...

The only other thespian Frisby ( but not thrown as a prop in an American play) is Terence Frisby ,who wrote "There's a Girl in my Soup" back when. His website lists Dominic as his son and as a stand-up comedian and voice over artist. Lightweight or what?

Mark Wadsworth said...

DBC, having now watched the clip, what disappointed me slightly was that Frisby (said to be from Money Week who are favourably inclined towards LVT) was getting resounding agreement from MK right until Frisby mentioned "land tax" and a couple of the advantages thereof and then MK just acted as if he had never heard of it before and drew the interview to a swift close.

Bayard said...

"MK just acted as if he had never heard of it before and drew the interview to a swift close."

Yes, because that's what the Masters told him to do.

DBC Reed said...

Mw
My recollection ( I can't access the video) is that Frisby was all for building on the Green Belt, deregulation and other standard Conservative drollery then threw the Land Tax in from nowhere, whereupon MK was taken aback exclaiming "That's not very Conservative " implying Frisby's other ideas had been.MK often draws programmes to a rapid conclusion because her runs out of time through developing a rant John Coltrane-like.
Anyway all the more reason to appear on the programme to put the record straight!

Mark Wadsworth said...

B, maybe, but he doesn't normally shy away from bashing bankers and rent seekers.

DBC, your recollection is wholly accurate.