A non-partisan journal of the left.

A Simple Solution to the Housing Crisis

Fri 2nd May 2008

House prices are out of control

But there is a surprisingly simple solution

There is no need to cite the extraordinary figures of the growth of the housing market over the past few decades. Reaching the bottom rung of the property ladder is now almost impossible for future generations – and everyone knows it.

The symptomatic explosion of property programs onto our TVs is unsurprising. However, what is surprising is the simplicity of a solution to the gross inequalities arising alarmingly from the bricks and mortar. Put equally as simply, it’s a new type of tax. Before you avert your eyes in disgust, take a moment to consider it. The idea is that it would replace the evils of Council Taxes, Stamp Duty, and possibly reduce VAT and Income Tax – now those are words that ought to make you squirm and then impulsively check your pockets. And here are the words that ought to make you rejoice: Land Value Tax (LVT).

The big idea is to level the playing field, as well as encourage efficiency in the way land is used. LVT is a levy not on the value of the property on top of the land, but on the amount of land itself. The less land you own, the less you pay. Let’s take Battersea Power Station as an example. You may have noticed that something is going on there – there are smatterings of scaffolding and evidence of other constructive activities. It’s such a pity that it’s taken over 25 years for anything at all to happen. So much land lying barren and useless while some people have nowhere to truly call their own should be bringing a tear to your eye – especially if you’re a rent-payer. Well, that need not have been the case. LVT would have penalised the holders of that whopping 13 hectares every year until they managed either to sell it on or make something useful and profitable out of it. The great derelict ruin would have been developed or converted into flats years ago.

Here’s another example that may make you even happier. Think of all those billionaires with multiple homes. Now contrast them with the houseless young ones of today and tomorrow. LVT would penalise the possession of not only second homes, but big homes. Those big second homes would be converted yet again into something useful, perhaps lots of smaller and affordable houses.

So what’s the end result? Well, let me paint a realistic yet pretty picture for you: lots of cheap houses for exactly the same amount of land. What’s more, there would be more development of existing derelict property, regenerating equally derelict areas and neighbourhoods. If there was ever a cause that urgently needed following, LVT is definitely one.
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