Friday, 21 November 2014

Poor Widows In Mansions In Northern Ireland

Northern Ireland never had Council Tax, they stuck with Domestic Rates, the last revaluation was in 2005 and the rates are about 0.8% of each homes 2005 value (or probably more than 1% of its current value). Sadly, the 2005 value is capped at £400,000, rather than having a higher or no cap and a correspondingly lower rate, but there you go.

They sensibly introduced a deferment option for Poor Widows In Mansions to shut up the Mylene Klasses of this world.

A few years later they did a review of the scheme, Andy Wightman uncovered this fine document:

Analysis carried out by NISRA for the Department in 2008 found there were 132,343 pensioner owner-occupying households.

Since its introduction, there have been 116 applications to the scheme – a take-up of 0.09%.

64 of these did not proceed beyond the initial stages. Of those that proceeded further in the application process, 21 were successful (in terms of a deferment agreement being entered into) and 18 were refused.


Logan Boettcher said...

What I don't get about the PWIM bogey is that the only thing that is lost by PWs is free site value if they are forced to sell. They will still get the full value for the paid-up dwelling they live in. They can then take that money and buy a structure of equal value, but it will be on land of less value (on a per square foot basis).

An extreme example would be if a PW had a 3 bedroom ranch style house on an 8,000 sq ft plot right next to the Empire State Building. The LVT would force her out to Staten Island, but she could have the exact same house, it would just be in a different location.

While this PW may not like it, she would be getting so much in return for relocating. First, she would be getting a CD that would offset or eliminate her new (lower) tax burden (and possibly leave her with some extra cash in her bank account). Second, the large amount of LVT paid by the new landowner who took her old site would add to her CD, netting her a larger gain. Finally (assuming we're going full-stop Geoist/Georgist), if the NY taxes on incomes, sales, buildings, and business profits are eliminated, all of the necessities and luxuries of life available for purchase will become much more affordable.

So yes, the PW won't be able to have a chunk of prime NY real estate all to her lonesome under LVT. But she will be able to have the same quality house in a place that will be just as lovely, free money to offset her lower tax liability, and more affordable EVERYTHING.

Logan Boettcher said...

Oh yeah, and assuming that we can only get about 95-97% of the land's value due to cautionary assessment practices, the PW will still be able to pocket some small bit of unearned gain for her "trouble."

Mark Wadsworth said...

LB, exactly. Beautiful explanation.

But I once heard a real life PWIM (actually he was quite income rich but his flat had gone up to millions) arguing "But I like where I live because it is convenient for central London. I don't want to give that up."

Logan Boettcher said...

MW-- Yes, I'm sure getting stuff for free is very convenient. But he would be fully compensated for his new-found inconvenience.

Land values have the very nice quality of internalizing and monetizing not only the direct costs of commuting into city centers (gas, tolls, congestion charges, etc.) but also the implicit costs of time lost commuting into city centers.

So if he's not willing to pay the going rate for the cost and time savings of living in a central location, those who do will be paying him for the privilege of excluding PW's from central city locations (rather than their landlord).

The truth is that not everyone can live in a particular location, so it's an inevitable law of physics that some people can't live in central London and some can. What isn't inevitable is that landlords get the money for the privilege because we have LVT. And LVT makes sure that the laws of physics don't leave some people on the outside looking in without full compensation.

Mark Wadsworth said...

LB, exactly. Basic physics.

But such Homeys moan about "being forced to live somewhere less favourable".

The point is that by living there, they are forcing somebody else to live somewhere less favourable etc.