From the FT:
With reference to your editorial on the dysfunctional housing market, I would agree with the “Too much help for homeowners” but not with “too little for builders”.
With the abolition of the domestic rating system, owner-occupiers of more expensive homes have seen their property tax burden decrease by a significant amount... Some further relief was given to them when 2.5% was added to the VAT rate, to pay for a reduction in the equally regressive Council Tax.
All these savings in tax have fed into house prices, so that landlords, property speculators and mortgage lenders have scooped the income whilst those comfortably on the property ladder have seen their wealth and their ability to borrow massively increase. The rest are not so lucky.
The demise of the domestic rating system had a lot to do with the lack of regular revaluation, so perhaps the Council Tax is about due for replacement now.
So far as builders are concerned, as Shaun Spiers points out, there is plenty of land with planning permission that is not being developed. What builders need is sticks, not carrots.
Property tax reform is the necessary first step to fixing the housing crisis. Land Value Taxation would kill house price inflation permanently and it could be introduced gently by replacing Council Tax on main dwellings on a revenue neutral basis for each local authority.*
LVT on all other land, whether developed or not, (replacing Business Rates) would provide the incentive to build. The Community Infrastructure Levy and Section 106 Agreements do the opposite and should be abolished.
Carol Wilcox, Secretary, Labour Land Campaign
* I hotly disagree on the maths, any new tax should be at a flat national ad valorem rate, same as SDLT, or else it would continue to be inefficient and regressive, but hey.
Thursday, 15 January 2015
From the FT:
My latest blogpost: Reader's Letter Of The DayTweet this! Posted by Mark Wadsworth at 14:55