From the FT:
Sir, Martin Wolf strikes the right note of resignation in " Buyers beware of Britain's absurd property trap" (Comment, October 11). With all three political parties dedicated to the homeownerist (1) policy of maintaining property prices at all costs for fear of losing elections, the situation looks terminal.
However, there is some faint hope for the site value, aka land value, taxation he mentions favourably – if it is in the "from here on" form of LVT which he proposed himself in "Why we must halt the land cycle" (Comment, July 9, 2010).
A "from here on" land tax sets a datum line and taxes any land price inflation from thence on, leaving the property owner in possession of the existing value and the banks with their collateral for mortgages.
Any demand stimulus from thence on would go into the general consumption of goods and services rather than being top-sliced by a household's rent and mortgage obligations as land, then house prices, stabilise. Homeowners won't lose anything except the "something for nothing" of house price inflation.
Politicians have to take one of the fabled tough decisions, if necessary by forming an all-party pact to defeat the menace of deliberate house price inflation.
Alternatively, there are well-placed land taxers of cabinet rank in two of the main parties who should be combining (possibly through an all-party parliamentary group) for a coalition.
DBC Reed, Northampton, UK.
1) Extra bonus points for using the H-word.
Monday, 14 October 2013
From the FT:
My latest blogpost: Reader's Letter Of The DayTweet this! Posted by Mark Wadsworth at 10:16