Monday, 16 December 2013

LVT and Airports

From the Daily Home-Owner-Ist

People who live near airports should pay less tax for ‘tolerating’ high levels of noise, a new report suggests.

The Institute of Economic Affairs argues that the area around runways could become ‘tax havens’ for local residents with public services paid for through taxes on airport operators.

The radical idea emerged ahead of tomorrow’s publication of an interim report by Sir Howard Davies into airport expansion in the South East

This is of course, one of the useful things about LVT - you not only get people who live near a railway station and get the perks of this that makes their commute better and raises their house price, you also compensate people who lose their house value due to being on a flightpath. And you don't need a huge bureaucracy deciding how far away is "close" or creating "tax havens", you just let the housing market adjust and the tax adjusts. People right underneath a jumbo will see their LVT become almost worthless. People a mile away will see a smaller loss.

And it would massively simplify public enquiries. You'd still need one as some developments would cause genuine economic damage. We wouldn't want someone building a nightclub next door to Stonehenge, as it would destroy more value than it created, for example. But we'd probably have a couple of new aircraft, and the problems of water shortages in the South East would evaporate (pun intended) as Thames Water would get on with building reservoirs.


Derek said...

Funny thing here is that the value of land near a new airport goes up for business purposes at the same time as it goes down for residential purposes.

So in such an area which was zoned for either use, land values would rise and LVT would act as an incentive for people to move out and make way for businesses. In an area which was zoned purely for residential, land values and LVT would drop to compensate for the noise. Looks good either way.

Mark Wadsworth said...

D, beat me to it.

Second point, you can have an slot auction (LVT for airspace), you could do that beforehand, and then all the enquiry has to do is add up auction proceeds, add on increase in likely business rental values and deduct likely fall in resi rental values.

(There must be plenty of stat's on these to be able to make reasonably accurate guesses).

If the result is a largish positive figure, airport gets expanded, else not.

Lola said...

The Stig., D and MW. All beat me to it. Reading the article this a.m. had me groneing and yelling at the screen 'LVT you idiots!'.

Bayard said...

I had an argument with a friend about this and did some research on house prices round Heathrow and Stansted, which latter I compared with a similar sized village the same distance from London in Kent that wasn't near an airport. Heathrow had a surprisingly small effect on house prices (ring of postcodes round Heathrow v ring of postcodes round them) and the benefits of Stansted being next to an airport* seemed to entirely balance the noise disbenefits. On the basis of that it seems that LVT wouldn't do much and that the IEA's report is just special pleading.

*on reflection perhaps the disbenefits of being next to an airport are balanced by the benefits of being next to the railway station with a good service to London that goes with the airport.

Derek said...

The comments on the DM article are actually quite sensible for once.

The Stigler said...


True. It's why in Australia they stick brothels on trading estates. No-one running a factory cares.

The problem is that you have to deal with existing housing around say, Heathrow.

Good thinking.


Interesting, as I'd have thought it would have been a bit lower. There's definitely a positive economic effect e.g. jobs related to the airport.

Then again, most of the evidence is that reservoirs don't make much difference - you get a rather nice man made lake near your house - but people seem to be wedded to their NIMBYism about them.

So, maybe there's something about any sort of development that makes people reflexively oppose it, assuming it will all damage their house prices.

Mark Wadsworth said...

B, that's my kind of research! Do a post!

Maybe highlight the swathes of West London under the flight path where they are simply giving houses away at cost price because nobody wants to live there etc.

Bayard said...

M, All I can find is the e-mail I sent my freind, which went thus:

"I have just checked the prices for 3-bed semis in Stansted compared to those in the Hoo peninsula, an equal distance to central London and found them to be higher in Stansted. If you want to check, is your friend, the relevant postcodes are CM24 and ME3.

Rents are about £100 pcm lower in the postcodes immediately surrounding Heathrow compared to postcodes further north, but still £1,200 pcm, hardly "virtually worthless" despite the noise."

The "virtually worthless" comment was because he was taking the line you are being sarcastic about above.

Bayard said...

"you get a rather nice man made lake near your house - but people seem to be wedded to their NIMBYism about them."

Perhaps they've all watched too many films where the reservoir dam breaks. OTOH, if the reservoir is made by digging a bloody great hole and filling it with water, this shouldn't be a problem, plus everyone around gets to see it, which they don't, if it is surrounded by a huge dam.