Friday, 6 November 2015

Killer Arguments Against LVT, Not (376)

BenJamin' stumbled across the letter sent by a rent-seekers' lobbying front to the chap looking into LVT for the London Assembly.

There's nothing new in there, just the tired and tested favourites.

The Army of Surveyors

London First approximate that it could be at least 10 years before an LVT could be brought forward...

Firstly, parcelling land and identifying land owners on which the proposed charge will be levied – in particular, where there are multiple land ownerships and complex lease arrangements or where a landowner is unknown will be challenging. It will require a significant capital investment to fund administrative body and the personnel to undertake this work and is likely to be a very lengthy process.

Secondly, navigating the planning and valuations process to determine the optimum land use and its value will also have significant time and financial requirements. Site visits to each land parcel will be essential. Should the site be considered underutilised, its ‘optimum use’ will need to be established.

If the landowner is "unknown" then the land is forfeited. If there is multiple ownership the multiple owners split the bill between themselves. If there are leases, then the freeholder pays tax on his ground rent and the leaseholder can deduct that ground rent from the amount taxable on him.

As to valuations, we can automate the process and it would take a few months.

Nobody - except twats like London First who are deliberately misquoting ever said "optimum use" which is an unknown quantity. The tax is on "optimum permitted use". For 99% of existing buildings, optimum permitted use is actual current use. Empty sites are even easier. The council just has to grant them permission to build up to the same density and type of building as surrounding plots which already have buildings on them and where the site value is a known figure and then taxes them on that. If there's no planning permission, then there's no location value and no tax either, obvs.

The Poor Widow Bogey

Ownership of a piece of land/property is not an indication of a land owner’s financial means to pay an LVT. For example, a ‘large’ dwelling that may have been in family ownership for a number of years may actually be a primary residence and yield no financial returns from which to pay the tax (nor is ownership an indication that those who live there have the ability to pay the tax). The end result is a tax on ownership not a penalty on those not bringing forward land for development.

It's not a tax on ownership any more than making a tenant pay location rent. It's a user charge.

And most LVTers agree that there would be a roll-up-and-defer-until-death option for Poor Widows In Mansions.

It will be the poor and the landless who suffer

We also consider that this approach would have significant implications on affordable housing delivery. The impact of this would in our view artificially inflate site values and impact upon development viability and ultimately, would reduce the level of affordable housing that a scheme could deliver.

We can knock that one straight out of the park as well. An LVT on undeveloped sites is exactly the same as the actual or notional interest cost of owning that land. The value of a finished home is unaffected by this - if a development drags on for years thus incurring a higher interest cost, then this has no effect on the finished selling prices or rental value. It's just that this will turn what is for many a notional interest cost which can be recouped out of development or planning gains into an actual cash cost with a correspondingly smaller planning gain. So no freebies.

And so on.