Friday, 12 January 2018

Killer Arguments Against LVT, Not (431)

Arch-Tory/NIMBY Nicholas Clarke on Twitter @drmagwai

And what you fail to mention is that lvt only works properly when all land is already developed. Do we want the UK to become a mega city?

This is the sort of baseless crap that we have to deal with.

I remember that Sobers (I think it was him) once advanced the argument that LVT would only work for an agricultural economy, also without justification or explanation.

As per usual, we are presented with two baseless arguments which cancel each other out.

Let's take a breath and do facts and logic:

1. Most of the UK by surface area is 'developed'. Up to one-tenth is actually built on (incl. roads, reservoirs, back gardens etc) and most of the rest has been 'developed' or adapted for farming and some bits have been kept close to pristine for tourism, leisure, wildlife etc.

2. Even if both arguments, taken in isolation had some validity (which they don't), then it would be quite easy to split up the UK (or any similar country) into two regions - the urban bits (where LVT would work properly, even by Nimby Clarke's own admission) and the remaining rural area (where LVT would work fine by Sobers' admission).

3. The UK is not going to become a mega city any time soon - with or without LVT - it would require a twenty-fold increase in population to about one billion to make it worthwhile. So that is the stupidest rhetorical question of the day.


Sobers said...

There is a point that an LVT could tend to encourage land to be developed from agricultural to housing or commercial uses. It depends really how the LVT is calculated. If calculated from capital values then it would tend to encourage development, because the capital value of a piece of land that is in a advantageous location for potentially getting planning permission is far higher than a pure agricultural value. 3-5 times as much, maybe even more. This is down to 'hope value' - people thinking 'If I buy this field I can get planning, and it'll be worth millions, so I can afford to bid several times its agricultural value', even for fields that are purely agricultural status and always have been. So the valuation of such fields would rise, as would their LVT and thus they would be forced into the development process as owners decided they'd have to sell it as the LVT would not be affordable out of any agricultural production.

If on the other hand the LVT was calculated on the rental value of the land, then this process would not apply - the rise in capital value due to hope of development does not affect the actual productive capacity of the land as farmland, so the rent one can achieve remains the same, so the LVT would also be unchanged.

What one has to understand that while there is a step change in the capital value of land on a change in planning, there is a leakage of that higher capital value BEFORE any planning change is ever made, because people value the prospects of that change before it happens. Thus any LVT based on capital values will pick up on that leakage, and thus the development process would become a self perpetuating loop.

Mark Wadsworth said...

S, proper LVT would be calculated on rental value of current actual/permitted use. Hope value would therefore be completely ignored.