Land values (3)

To sum up; land values vary enormously across the country, depending on what type of land it is, and in the long run are a function of local amenities and planning permission.

There is a third element, the speculative element. As we are now finding out at great cost, booms and busts in the property market are actually poison for the economy*. Since the early/mid 1990s, residential land values (i.e. land with suitable planning permission or land with a house already on it) have increased between four- and tenfold.

This is a pure speculative bubble - you can blame greed; mass-immigration; buy-to-let; estate agents; reckless lending by banks; very restrictive planning laws; land-hoarding by builders; the complicity of existing home-owners in thrall to the 'feelgood factor' or anything else you like. These bubbles occur every 18 years or so, and the fall-out is always the same (only this was the biggest bubble ever, so the fall-out will be far worse...).

So to my mind, the main argument for a tax on 'land values' is that it is really a tax on the speculative element of property values, which I tried (and probably failed) to explain over at ConHome last month.

* Notwithstanding that sell-to-renters, property developers, estate agents, down-sizers, presenters of TV property porn, derivatives traders at banks etc have all benefitted enormously over the last ten years. See also disclaimer 10 in the ConHome article. I am looking at the overall impact.