Sunday, 1 June 2014

Unlikely Land Value Taxers: Boris Johnson and Peter Wynne Rees

From The Evening Standard (page 29, 30 May 2014) or see here:

PENSIONERS should be able to protect the value of their property "nest egg" from inheritance tax if they downsize by moving to a smaller home, Boris Johnson believes.

The Mayor's revised draft housing strategy contains plans to encourage people aged 65 or above to move into smaller properties to free up family homes for younger Londoners…

It came as Peter Wynne Rees, the homer chief planning offer in the City of London Corporation warned that the London housing market was being fuelled by "dirty Russian money being laundered and Chinese gambling".

He told BBC London that new riverside developments in Pimlico and Vauxhall were merely "safety deposit boxes" for foreign investors and called for a "punitive tax" on empty properties.

As per usual, reducing the tax burden (including but not restricted to inheritance tax) on everything that isn't occupation of land (transactions in land are not occupation thereof, things like SDLT are bad taxes too) and collecting it as an annual tax on land values instead ticks all their boxes.

With an annual tax, the sooner an over-occupying pensioner trades down, the more tax he saves; if he downsizes sharpish, he (and his heirs) end up paying much less tax than he would have pay under current rules; those pensioners who currently have real savings and live in more modest homes end up better off anyway etc.

And where's the dividing line between "vacant" and "under-occupied"; or between "under-occupied" and "just right" or even "overcrowded"? Why not make the annual tax the same regardless of how many people live there; non- and under-occupiers will get lousy value for money and everybody else gets much better value for money, then market forces sort it out.


Physiocrat said...

Boris isn't trying to force the poor widows of London out of their mansions, is he? Shocking.

Lola said...

And who decides who is under-occupying? Some new bloody quango no doubt. The only fair way to decide that is by a price system and LVT is the most efficient way of deciding that and the allocation of housing. (I speak as an 'under-occupier' - by most peoples definition. But I have lots of children and grandchildren and friends that like to come and stay. In my terms I am not at all 'under-occupying).

DBC Reed said...

The above account of things is a bit rum.
Boris is trying to crush efforts by Islington Council to institute an empty-flat tax; Rees has gone (into a cushy academic job)and has been replaced by Annie Hampson.
So the shit carries on, most likely.

Anonymous said...

Presumably, no 'empty property tax' can be higher than the cost of paying someone respectable to live in said property. Given that the job comes with a snazzy London pad, I'm guessing that's not all that much.

Mark Wadsworth said...

Phys, in their more lucid moments, Boris and Tony Travers are pro-LVT, even though they hotly deny it when asked directly.

L, exactly, that's the point. A Poor Widow in a five bed home in the middle of nowhere worth £100,00 is not over-occupying by any stretch of the imagination; a Poor Widow in a two bed flat in the middle of London worth £1 million clearly is.

DBC, yes, the shit carried on, forever. Gives us something to do in our spare time, I suppose.

TTG, which is why "empty" is in itself meaningless. Is a six-bedroom home with one occupant truly emptier than a block of six flats, only one of which has an occupant?

Physiocrat said...

What about the poor widow who lives in a 2-up 2-down and an outside bog orth a million pounds? She bought it for £150 out of her war pension when her husband was shot down over Germany in 1943. Now she is 96 years old. Where will she go if she is forced out of her home?

Derek said...

Don't worry, Phys. I'm sure that Boris's mum will be able to find somewhere with the cash she gets when she sells her house. If not she can always move into one of his spare bedrooms.

Mark Wadsworth said...

Phys, you forgot to mention that her private pension was decimated by Gordon Brown's pension raid.

Or that, no way on earth would the government ever simply offer pensioners a deferment-til-death option. Like so many other countries do.

D, no Boris wouldn't be so selfish as to worry about his own Mum, he's worried about PWIMs without any relatives who could help them out. But of course the self-same PWIM's want to "keep the family home in the family.