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Traktion

Better Planning Permissions Or Land Value Tax?

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Since much discussion has been made about a land value tax, it strikes me as an important area of interest in regards to property/land prices.

The key arguments for a LVT seems to be:

- stops land hoarding

- stops the owner being able to raise rent up to credit saturation point

- land is of limited supply, so demand for it can outstrip supply if the land owners restrict sales

- land was stolen from the many and given to the few gifted to the gentry 100s of years ago, which is unfair

The concept seems an interesting one. The latter point seems to be one which is very hard to get around, without some sort of forced redistribution, which is highly unlikely to happen.

However, I have been pondering the idea and it made me wonder about whether better planning laws would be an alternative. It seems that a LVT may be hard to assess and requires a lot of state involvement, which I see as a flaw. If planning was allowed to be less restrictive, the premium for land with planning permission would surely diminish, approaching that of agricultural land.

As agricultural land is closer to a free market rate, based on supply/demand of the actual "space", it would seem on the face of it a simple alternative to a LVT. If we are going to simplify the system and get to the crux of the issue, we have to be careful that we are fixing the problem, rather than a symptom.

It could be argued that those gifted with the land originally was unfair. You could also argue that a cartel/monopoly may exist if there are few land owners. However, there is still a lot of free land, particularly outside of England. For agricultural purposes, the land is relatively cheap, despite suffering from credit inflation to an extent too - ultimately, if you are to profit from the land, the market will dictate the price. If there is no "special price" for land with planning permission, then surely the pricing would be much more reasonable.

"Land banking" to monopolise good development land may also be a problem, but surely that can only happen in prime areas - there is surely too much land to hold it all without producing something with it.

So, with the government trying to push us towards villages/towns/cities to stop "urban sprawl" partly responsible for the mess we are in? Regardless of what the nimpys say about the spoiling of their view, should there be more relaxed regulation? Pushing us all towards prime land is surely going to play into the hands of the developers/land bankers. Perhaps getting to the root of the problem is not stopping "urban sprawl", but being more careful about letting the population explode, due to poor immigration control?

I would be interested in hearing peoples opinions on this.

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The need for a land value tax was first identified in a situation in which there was no such thing as planning permission. Your theory that land would suddenly be in suppersupply is flawed - land takes on a rent in accordance with its location. The relatively low price of agricultural land presently is a reflection of the fact the it cannot be built on.

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I would reduce the population first and foremost.

Rather than give benefits for having children - people should have to pay higher taxes for their children's education, health services etc. It should all even out in the end.

Set an annual target reduction in population until we get to about 10 million.

Only let people into the country if there is room i.e. we're below the target.

IMO, there is a good argument for reaching a level where we can be self sufficient in regards for food. I don't know what population we would need to reach that, but this would seem like a wise strategy for long term sustainability. It would also have a positive side effect of less overcrowding etc.

I understand (Cells mentioned it in another thread) that our birthrate is decreasing, so no policy other than tighter border control should actually be needed to achieve a reduction of population either.

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The need for a land value tax was first identified in a situation in which there was no such thing as planning permission. Your theory that land would suddenly be in suppersupply is flawed - land takes on a rent in accordance with its location. The relatively low price of agricultural land presently is a reflection of the fact the it cannot be built on.

I never mentioned super supply - of course it will always be limited - but there is a clear and large gap between agricultural land and land which can be built on. While prices for the most basic of land use (agriculture) is based on how much they can rent the land out for, there is clearly a special and expensive case if you want to build on it.

Perhaps the problem needs to be looked at in two halves:

- basic land rental (agricultural)

- premium land rental (property)

The divide between the two must surely be the effect of planning laws - how else would this divide exist?

For basic land rental, this could be the monopoly/cartel issue, but there is a lot of land out there. A quick google for 'agricultural land cost' returned this page, talking of £4,000* per acre in Norfolk being expensive. Clearly, there is no shortage of low cost land - it only becomes a problem when you want to build on it.

"The relatively low price of agricultural land presently is a reflection of the fact the it cannot be built on" - quite right! I am surrounded by fields where I live. I hear cows/sheep mooing/bleating if I open the window... the fields are just as good for building on as the plot this house is on. It isn't marginal land, on the side of a sheer slope or some such - it is the same sort of land. This is the case all over the country, so I simply don't buy that you cannot build on it. The only reason you cannot build on it, is the planning law, which brings me back to my initial point.

Now, if you want a cheap house, near all the luxuries like shops, schools, pubs etc, of course you will pay a premium for it - the position is sort after and subject to supply and demand. You may say the person who is selling the land near these places is profiteering from this, but their family may have owned the land for 100s of years, when it was a wee village miles from their land. There is an argument that they may have been given the land as gentry, but I outlined the problem with fixing that above.

I am open to be swayed either way on this. Like I mentioned above, on the face of it a LVT seems like a reasonable idea. However, we need to ensure we are getting to the crux of the problem.

EDIT: *For those who are not privy to building costs, the land has usually been the overriding cost. A simple small house can be built for £50-100k IIRC.

Edited by Traktion

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We do not have a surplus of people. Any birth rate at all can be 'too high' if one group owns the ground on which people can exist.

If you have 1 potato and 10 mouths to feed, there is clearly a problem. The land can only feed so many people.

EDIT: double post or did it not post at all? :blink:

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I never mentioned supper supply - of course it will always be limited - but there is a clear and large gap between agricultural land and land which can be built on. While prices for the most basic of land use (agriculture) is based on how much they can rent the land out for, there is clearly a special and expensive case if you want to build on it.

Perhaps the problem needs to be looked at in two halves:

- basic land rental (agricultural)

- premium land rental (property)

The divide between the two must surely be the effect of planning laws - how else would this divide exist?

I am also saying the divide is caused by planning restriction - agricultural land has a low price because it cannot be used fully

For basic land rental, this could be the monopoly/cartel issue, but there is a lot of land out there. A quick google for 'agricultural land cost' returned this page, talking of £4,000* per acre in Norfolk being expensive. Clearly, there is no shortage of low cost land - it only becomes a problem when you want to build on it.

It is a problem in either case; the rent on agri land is lower but the use is restricted (which is why the rent is presently lower)

"The relatively low price of agricultural land presently is a reflection of the fact the it cannot be built on" - quite right! I am surrounded by fields where I live. I hear cows/sheep mooing/bleating if I open the window... the fields are just as good for building on as the plot this house is on. It isn't marginal land, on the side of a sheer slope or some such - it is the same sort of land. This is the case all over the country, so I simply don't buy that you cannot build on it. The only reason you cannot build on it, is the planning law, which brings me back to my initial point.

Yes, it is planning laws - there is nothing that makes much of this land otherwise physicaly unsuitable

Planning laws were largely introduced to solve a problem though. That problem is that useful land (for any use) can be hijacked into speculation which pushes that use further and further out into more an more marginal land and then users are then faced with paying the speculator off or accepting more and more marginal, sprawled use. It is basically the same problem of speculated, overpriced land that we have now, and planning permission failed to solve it. The point I'm making is that just as adding planning permission fails to solve this, removing planning permission will also fail to solve this problem.

Now, if you want a cheap house, near all the luxuries like shops, schools, pubs etc, of course you will pay a premium for it - the position is sort after and subject to supply and demand.

Except there is a fixed supply and a monopoly.

You may say the person who is selling the land near these places is profiteering from this, but their family may have owned the land for 100s of years, when it was a wee village miles from their land.

Did they add the new larger town and roads that changed the status of 'their land' ?

They are being paid for work other people have done

There is an argument that they may have been given the land as gentry, but I outlined the problem with fixing that above.

Almost entirely irrelevant to the argument

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I am also saying the divide is caused by planning restriction - agricultural land has a low price because it cannot be used fully

It is a problem in either case; the rent on agri land is lower but the use is restricted (which is why the rent is presently lower)

Yes, it is planning laws - there is nothing that makes much of this land otherwise physicaly unsuitable

Ok, glad we agree here.

Planning laws were largely introduced to solve a problem though. That problem is that useful land (for any use) can be hijacked into speculation which pushes that use further and further out into more an more marginal land and then users are then faced with paying the speculator off or accepting more and more marginal, sprawled use. It is basically the same problem of speculated, overpriced land that we have now, and planning permission failed to solve it. The point I'm making is that just as adding planning permission fails to solve this, removing planning permission will also fail to solve this problem.

I see your angle here too. Essentially, tightening planning has made the problem more acute, as we can't decide to live in non-prime land due to planning. I assume the idea of planning was to stop the "urban sprawl", perhaps caused by an increased population, but it created a deeper problem instead.

Except there is a fixed supply and a monopoly.

Without tight planning laws though, you can choose to live away from the expensive, monopolised areas. There is loads of free land here in NI, but they tightened up planning laws during the boom, making it worse. They have softened them again, but they have not been well received.

Did they add the new larger town and roads that changed the status of 'their land' ?

They are being paid for work other people have done

No, but they may not have expected the windfall. I have know a friend whose father was offered a large amount of money for some land, which he happily agreed to.

Almost entirely irrelevant to the argument

If the gentry own 25% (iirc) of the land, I would say it is noteworthy.

BTW, there is no need to be so defensive - I do not care if I am wrong, I just want to find out the facts to decide what is the best policy.

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anon-tumbril.jpg

Huh? :huh:

I mean I don't mind being wrong - I just want to debate and determine what is right from wrong. I'm not sure what the picture has to do with this?

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Huh? :huh:

I mean I don't mind being wrong - I just want to debate and determine what is right from wrong. I'm not sure what the picture has to do with this?

You're not wrong.

Far from it. I was just cutting out all the beating about the bush I tend to indulge in.

It's a diagram (with colouring-in :) ) of the only viable solution to what you've identified as crucial problems.

- stops land hoarding

- stops the owner being able to raise rent up to credit saturation point

- land is of limited supply, so demand for it can outstrip supply if the land owners restrict sales

- land was stolen from the many and given to the few gifted to the gentry 100s of years ago, which is unfair

The concept seems an interesting one. The latter point seems to be one which is very hard to get around, without some sort of forced redistribution, which is highly unlikely to happen.

Every square inch of land in this country ultimately has a single landlord, who can by right (if not in practice, which is why it's very much a götterdämmerung-style final resort) send agents to evict , annul the title, or reallocate any part of it, by squishing a blob of semi-molten resin & wax. Everything else is piss and wind to obfuscate the trick.

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You're not wrong.

Far from it. I was just cutting out all the beating about the bush I tend to indulge in.

It's a diagram (with colouring-in :) ) of the only viable solution to what you've identified as crucial problems.

Every square inch of land in this country ultimately has a single landlord, who can by right (if not in practice, which is why it's very much a götterdämmerung-style final resort) send agents to evict , annul the title, or reallocate any part of it, by squishing a blob of semi-molten resin & wax. Everything else is piss and wind to obfuscate the trick.

Ah haa, I follow you now!

Viva la revolution? ;)

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If the planning laws were relaxed then I would expect a bout of speculation to take off as the previously cheap agricultural land would then become investment grade real estate and rise up to its real market value. Far from solving the problem it would give current owners a huge windfall at the expense of people that want to use the land.

It also doesn't stop the problem of hoarding leading to restricted supply and higher prices, it would probably just exacerbate it.

Edited by chefdave

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Ah haa, I follow you now!

Viva la revolution? ;)

It's the sort of lazy-ąrsed simpleminded solution that appeals to me, but I suppose historical experience shows that things tend not to go as intended.

So, being the kind-hearted old twinkly-eyed dispenser of Werther's Originals that I am, rather than editing chinless wonders, I'd be really, really keen on trying out various implementations of Land Value charging, just because we're starting from where we're at, and seeing what sort of bizarre and counterproductive unintended consequences are thrown up.

And dealing with those, rather than having to get stuck in with a mop and bucket afterwards, like one does with the other method.

[edit] knackers, got to go, Princess Peach is getting on my case about cooking and stuff :(

Edited by Wario

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Since much discussion has been made about a land value tax, it strikes me as an important area of interest in regards to property/land prices.

The key arguments for a LVT seems to be....

If the LVT is such a panacea from boom and bust in housing markets how come countries like Germany and Austria avoid those BBs without any LVT in place?

From the standpoint of the economic theory, what is happening is more to do with monopoly, market manipulation on supply side and extremely laxed lending and market manupulation on demand side

The manipulation of both - supply and demand - is leading to what economic theory calls "absolute rents" and prevents capitalist forces from bringing demand, supply and prices into a balance

http://www.internationalviewpoint.org/spip.php?article285

"By its very nature, capitalism, based upon private property, i.e. ’many capitals’ - that is competition - cannot tolerate any ’eternal’ monopoly, a ’permanent’ surplus profit deducted from the sum total of profits which is divided among the capitalist class as a whole. .....will in the long run reduce or eliminate all monopoly situations."

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Kevin Carhil's book Who Owns Britain is essential reading for anyone who is interested in the subject of land ownership, you will be shocked to find out just how much money is paid as subsidies to land owners by the tax payer, also how the large land owners take most of the key positions of power in the country that prevent the land from ever being distributed in a fair manner

This is information here is taken from the book, which I use for my HPC signature.

There are 60 million acres of land in the UK, 28 million of which is owned by just 40,000 families

There are 5,000 families that own over 1000 acres each.

2,8 million acres, just one tenth of the available land is owned by 16,8 million home owners.

The land occupied by the royal family 677,000 (crown est, duchy cornwall, lancs and private)

Forestry commission 2,400,000,

Mod 750,000, The National trust England Wales 550,000,

Pension funds 500,000,

Utilities 500,000,

The Crown Estate 384,000,

The Duke of Buccleuch 277,000,

The National trust of Scotland 176,000,

The Duke of Atholl 148,000,

The Duchy of Cornwall 141,000,

The Duke of Westminster 140,000,

The Church of England 135,000,

The Invercauld Trusts 120,000,

The Alcan highland estates 116,000,

The Duke of Northumberland 110,000,

The Earl of Seafeild 101,000,

The Portland Estates 95,000,

The RSPB 90,000,

Co-op farms 90,000,

Edited by enrieb

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I see your angle here too. Essentially, tightening planning has made the problem more acute, as we can't decide to live in non-prime land due to planning. I assume the idea of planning was to stop the "urban sprawl", perhaps caused by an increased population, but it created a deeper problem instead.

It makes it a bit more acute; people pushed outwards pay the same price in a different way.

Without tight planning laws though, you can choose to live away from the expensive, monopolised areas. There is loads of free land here in NI, but they tightened up planning laws during the boom, making it worse. They have softened them again, but they have not been well received.

At the moment it is cheap; if it becomes part of a ring around a town which is growing because speculators force people outwards, it will become expensive.

No, but they may not have expected the windfall. I have know a friend whose father was offered a large amount of money for some land, which he happily agreed to.

They might not expect it, but the production they enjoy for doing nothing still has to be produced by someone else who isn't, as a result, paid for it.

If the gentry own 25% (iirc) of the land, I would say it is noteworthy.

It's noteworthy because it is one demonstration that 'the market' is not distributing it at all effectively - just as theory predicts

Whether 25% of the land is owned by people who were given it by their family or who bought it makes no odds

BTW, there is no need to be so defensive - I do not care if I am wrong, I just want to find out the facts to decide what is the best policy.

I was rushed sorry

Edited by Stars

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Kevin Carhil's book Who Owns Britain is essential reading for anyone who is interested in the subject of land ownership, you will be shocked to find out just how much money is paid as subsidies to land owners by the tax payer, also how the large land owners take most of the key positions of power in the country that prevent the land from ever being distributed in a fair manner

This is information here is taken from the book, which I use for my HPC signature.

There are 60 million acres of land in the UK, 28 million of which is owned by just 40,000 families

There are 5,000 families that own over 1000 acres each.

2,8 million acres, just one tenth of the available land is owned by 16,8 million home owners.

The land occupied by the royal family 677,000 (crown est, duchy cornwall, lancs and private)

Forestry commission 2,400,000,

Mod 750,000, The National trust England Wales 550,000,

Pension funds 500,000,

Utilities 500,000,

The Crown Estate 384,000,

The Duke of Buccleuch 277,000,

The National trust of Scotland 176,000,

The Duke of Atholl 148,000,

The Duchy of Cornwall 141,000,

The Duke of Westminster 140,000,

The Church of England 135,000,

The Invercauld Trusts 120,000,

The Alcan highland estates 116,000,

The Duke of Northumberland 110,000,

The Earl of Seafeild 101,000,

The Portland Estates 95,000,

The RSPB 90,000,

Co-op farms 90,000,

Those 40,000 names - are they now on an IBM computer?

http://www.no2id.net/content/flash02.html

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Total government revenue is around £600,000,000,000 and there are 60,000,000 acres of land.

That works out at around £10,000 per acre.

Given that on average a normal home owner only owns 0.2 acres leaving a total tax bill of £2000.

Of you can't make an acre of land produce revenue then sell the land, thus lowering the land prices.

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Total government revenue is around £600,000,000,000 and there are 60,000,000 acres of land.

That works out at around £10,000 per acre.

Given that on average a normal home owner only owns 0.2 acres leaving a total tax bill of £2000.

Of you can't make an acre of land produce revenue then sell the land, thus lowering the land prices.

How and why would this affect HPs?

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Those 40,000 names - are they now on an IBM computer?

http://www.no2id.net/content/flash02.html

Nope not by a long shot, but your details are. The land registry only records sales, its very difficult and costly to find out who owns most of the land in the UK. You should read Kevin Carhil's book Who Owns Britain to find out how the system is used to conceal who the land owners are.

http://ccgi.who-owns-britain.com/wobi/wob002.pgm?countryid=1

It doesn't actually mention land in that video you posted.

Edited by enrieb

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If the LVT is such a panacea from boom and bust in housing markets how come countries like Germany and Austria avoid those BBs without any LVT in place?

Neither country has LVT but both countries have far more taxation directly or indirectly falling on land values than the uk has. Germany, for instance, has a specific speculation tax. However most of these taxes manage to fall somewhat messily on land value and other things so the effects are a mixed bag of the bad effects of over taxation and some good effects of taxation falling on land. The land factor is why although much economic theory predicts low taxation regimes should be miles better than high taxation regimes - in reality , they aren't miles better.

Edited by Stars

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How and why would this affect HPs?

I'm not sure how your question relates to the thread, it seems obvious that it would affect house prices given that a large part of a properties value comes from the value of the land which it is built on. If you could expand on what you mean in relation to the context of the thread, I will try to give you a better answer.

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How and why would this affect HPs?

They would fall through the floor..a house would exchange for around the material and labour cost of construction or less (which is what houses should cost)

The reform should be implemented gradually by incrementally shifting taxes from other sources

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They would fall through the floor..a house would exchange for around the material and labour cost of construction or less (which is what houses should cost)

The reform should be implemented gradually by incrementally shifting taxes from other sources

They would exchange at around as much as the banks are willing to lend - 4.6X combined income plus any cash deposit available

LTV does not address ongoing manipulation of supply of properties and demand created by excess lending

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